Read an amazing article on 10 March in a national pink daily on Term Insurance with Return of Premium. ROP as it is called.
The author had argued that a Term ROP should not be bought because it is more expensive than the pure Term insurance and hence it should not be bought.
This is wrong. Completely wrong argument. Conclusion is right!! LOL
When you take a term insurance you take for a risk cover. Say you are 34 years of age and have taken a term insurance for 30 years (till your age of 64)….for Rs. 1 crore. Your wife is not working – she is looking after 2 babies…so you need this cover of Rs. 1 crore….just in case.
Fast forward to 15 years later. You had a fantastic career run, you encashed your EsOPs. Your properties did well, and your dad left you a fantastic portfolio and a nice house. Your net worth is now Rs. 14 crores, you are in business and your wife is working too.
Your kids are doing well in life – and you think they will do great in their career too.
Of what use is the Rs. 1 crore sum assured through a term insurance? zilch.
So you need to THROW IT AWAY. Now.
You can throw away a term insurance plan PROVIDED it has not developed some kinda ‘surrender’ value…however that is not worth the trouble…!!
Oh la la la…..your TERM ROP money is lost. Gone forever.
Also you took a Rs. 1 crore policy from company A in 2010 and the premium was Rs. 6783 for one year.
Exactly after one year you find that for your age company E is offering Rs. 1 crore sum assured for Rs. 6343….
SO YOU THROW AWAY THE POLICY FROM CO. A….and buy a new one from company E. Simple.
So you take a PURE TERM PLAN so that you can have full flexibility.
sorry Business standard – had to do this!
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