Monday, March 29, 2010


Mr.Jagannath Surasgar asked : "i am looking for a pure term ins for my 18 year son. i dont see many companies offering term insurance for this age. most of them have min age at 21. does anyone know who would be doing cheapest term insurance at lowest age?. Shall I go for Free Insurance offered by some Mutual Funds?"

Srikanth Matrubai advises :

Thankfully, you are not thinking of taking a ULIP but a Term Plan.

That's very knowledgable of you.

Yes, it is true that there are not many Insurance companies who provide Insurnace cover for a 18 year old. However, Aegon religare is offering the term plan for age 18. As per your requirement you can check the exact premiem from the company website.

However, since your son is not earning yet, I do not think it makes sense to go for Term Plan. All the Talks ( Insurance is cheaper at Early Age etc.) are misleading to TRAP the Customers.

You may Start Investing for him in any Mutual Fund ( Preferably) wth Free Life Insurance. Many AMCs offer Free Life Insurnace with NIL charges. These are Reliance, Kotak, Birla, DWS, LIC (MF) and UTI.

Among these DWS Tax Saving Fund offers a simple and uncomplicated Term Insurance cover of 5 times your Investment as Life Insurance, subject to a maximum of 5 lakhs.

Birla Century Sip gives you a cover which will be equivalent to your market value of the units you have or 100 times your monthly sip whichever is less.

Caveat : These Mutual Funds have the right to modify the terms of Insurance, especially after the most unethical modification done by DWS Mutual Fund, I have started to have second thoughts on recommending these combo products.

Also, liquidity becomes an issue when you go for these Free Insurance offered by Mutual Funds.

It is always preferable to keep your Insurance and Investments separate.

Don't buy any plan either MF or ULIP with insurance/risk cover attached even if they claim is "free"

Do consult your Financial Advisor before commiting your investment.

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