FINANCIAL PLANNING ASK THE EXPERT

Dear Mr. Ramanujam, the full form of ULIP is Unit Linked Insurance Plan. ULIP is a 2-in-1 solution as it is a ideal mixture of investment and insurance.

- Anil Chopra

Q. I have been advised by my investment advisor that I should consider investing in a ULIP plan. My current age is 47 yrs. and I already have a term plan with sum assured of Rs 25 lakhs. My annual income is Rs 10 lakhs, and I have two daughters studying in college. Please advise whether I should consider investing in a ULIP. Please also suggest me some good ULIP plans. Mr. Ramanujam, Madurai  

Ans.We have noted that you already have a term plan with sum assured of Rs. 25 Lakhs, but that is not enough as your annual income is Rs. 10 Lakhs and as per a thumb rule you must have at least 7 to 10 times of your annual income as sum assured. While going for a ULIP you have the flexibility of choosing equity or debt or hybrid for your investment part. Since you are only 47 yrs. of age, we would suggest you to go for equity based ULIPs so that you are able to create wealth as well as have the protection of Life insurance coverage.  

Please note that if you are continuing with the old tax regime, your ULIP premium will entitle you to claim deduction u/s 80C up to a maximum of Rs. 1.5 lakhs p.a. Also, on maturity entire proceeds of the policy will enjoy tax free status in case the annual premium of ULIP plan is less than Rs. 2.5 Lakhs.  

You may choose from the following options:  

1. TATA AIA Fortune Pro

2. ICICI Lifetime classic

3. HDFC Click 2 Invest  

For more details and help in filling the application form etc. please visit our Madurai branch. The address is given in last few pages of this magazine.