Do you know what is an endowment policy? Is it better than a money back policy?

Why do insurance agents recommend unit linked insurance plans instead of term insurance?

Is there a good insurance policy for the physically challenged? What are the riders attached to it?

How much insurance would you require if your wife and parents are dependent on you?

Get Ahead Money expert T Srikanth Bhagavat answered these and other insurance related queries during a chat with Get Ahead readers on April 11.

For those of you who missed the chat, here is the transcript.

Part I:- How to secure your child's future

sunil asked, Good afternoon Mr Bhagwat, I am physically-challenged (40%) and also suffering from arthiritis though I am active and gainfully employed as a consultant. Since the other insurance companies are not accepting my proposals (i.e. the medical exam/blood tests proposed would show a very low haemoglobin level on account of arthritis) I have invested Rs 20,000 in UTI ULIP on 20/03/2007 for a 15-year policy. Is there any other good company, which can accept my proposal under the above-mentioned circumstances?

Srikanth Bhagavat answers, They may charge a health extra for the arthritis condition.

Beski asked, I have joined Unit Plus II Regular plan for NRIs with investment of rupees one lakh every year for three years, but it does not seem to be very profitable at the moment. Do you think it is better to withdraw after five years as allowed or let it go for the full term of 20 years?

Srikanth Bhagavat answers, ULIPs are linked to equity market performance, and this cannot be helped. The longer term should prove beneficial.

vandu asked, hello myself vandana, unmarried, and I want to take insurance ULIP policy of Bajaj Allianz. Is it better to take or which is best for me. My monthly earning is not more than Rs 12,000. Please suggest a good idea.

Srikanth Bhagavat answers, If you do have dependents, choose a good ULIP, as the limited savings capability will give you both savings and protection.

mayank123 asked, what are the criteria to choose a good insurance policy?

Srikanth Bhagavat answers, Base it on your financial plan and need. Given that there is a need for protection, choose insurance based on affordability of premium.

neerajkulkarni asked, I am 35 years old and hold insurance policies worth Rs 1.5 lakhs mainly done only for tax benefits. I have two kids: one is 7-year-old and the other 3-year-old. Do you have the policies for children, which can mature after 10 to 15 years and what is the ideal amount to be invested?

Srikanth Bhagavat answers, A ULIP with the kids as beneficiaries will do. Beware of the charge structure when you choose the policy.

Rajvi asked, Sir why do insurance agents take a long time to get us the Term Policy Bonds?

Srikanth Bhagavat answers, Check the service provision in that company.

querychap asked, I am 29-year-old and I have a money back policy with LIC for sum assured of Rs 6 lakhs and ULIP with HDFC and I am investing Rs 2,000 per month. I have my parents and also my wife dependent on me. Is it advisable to take some term policy? btw, I earn around Rs 40k per month and my expenses are around Rs 25k. Pls advice which plan to take which can cover my family expenses in case of some unfortunate event/s?

Srikanth Bhagavat answers, A large term plan will be needed. To the extent of at least Rs 30 lakhs.

sweety asked, which is better -- money back policy or life time endowment policy?

Srikanth Bhagavat answers, Money back policies are always more expensive. Go for the whole life-cum endowment policy. 

sagar asked, In Max Newyork whole life insurance policy the agent said that it can be converted to Pension Plan. Will you please confirm that whether I can take pension option?

Srikanth Bhagavat answers, You can switch to a pension plan of any company.

cspp97 asked, Hi, Money plus plan - LIC - Gives Rs 645,000 return after completion of twenty years but other private sectors are offering very good returns compare to LIC. Can we buy that ULIP (Private)?

Srikanth Bhagavat answers, Many agents provide illustrations of returns. The assumptions there are very often too optimistic. Assume a return of 15% to 18% over the long term. This is achievable.

Imtiaz asked, Hello Sir, I am 42-year old and my child is of 12 years. I need a policy which will help me to finance his future studies. I can pay a premium in the region of Rs 50,000 pa. Pls advice.

Srikanth Bhagavat answers, Since the age is already 12 years, go for a combination of term plus equity funds.

dinesh asked, sir, I have invested in Kotak Safe Investment plan-II for three years premium as Rs 50,000. Kindly give your suggestion on this.

Srikanth Bhagavat answers, Since it is a capital guaranteed product, do not expect high returns from it. Otherwise, good.

shyam asked, hi, I am 24-year-old and saved some money. Recently I have heard about SBI's Unit Plus II Plan in which I desire to deposit Rs 25,000 for three years as a whole life option in order to get insured till 99. Do you prefer it for me or anybody else?

Srikanth Bhagavat answers, Do not plan for only three years. You must be prepared to pay premiums continuously, to retain the protection part of the policy.

digiworld asked, WHICH IS THE BEST TERM POLICY AND OFFERED BY WHOM THAT CAN RETURN PREMIUMS WITH GUARANTEED PROFITS AFTER 20 YEARS.

Srikanth Bhagavat answers, Term policies do not give 'profits'. A good term policy with return of premiums is Metlife's TROP, where there is 10% return guaranteed on premiums paid.

s dutta asked, hi, I have an insurance policy with the Aviva Life Insurance for the last 5 years to mature after 20 years. Their service is not satisfactory and I wanted to discontinue and withdraw my policy and start a new one with LIC. But the company claims that one may not discontinue a policy. Is it legal on their part? Can one never discontinue paying premiums?

Srikanth Bhagavat answers, If it is an endowment plan, you will lose a lot of money when you prematurely close the plan. If it is a ULIP, you can.

a asked, what is endowment policy?

Srikanth Bhagavat answers, It involves a life cover for a certain term of years during which a regular (annual) premium is to be paid. At the end of the term the accumulated premiums plus a certain return will be paid back. In case of premature death, before the term ends, the beneficiary will be paid the sum assured value of the cover.

ambadyunni asked, Hi I am 50, and want to know which is the policy that will give retirement benefits as well as insurance cover.

Srikanth Bhagavat answers, Pay ULIP premiums for 10 years and then start withdrawing for your monthly needs. The whole life cover will continue. But remember that, at your age, mortality charges will be higher.

Nambiar asked, Why are Cos and agents very reluctant to provide term insurance (life) merely because commissions are less?

Srikanth Bhagavat answers, You have answered the question yourself! For bigger covers, medical examinations are involved, which takes more time to 'close a deal'. This may prompt agents to suggest policies which can be closed asap.

kk asked, I am becoming father next month. I don't have any policy. I am 30-year-old. Can you please suggest which ULIP or plan should I go, to take care of my child's career and future. Can one hold more than one insurance policy (pension /children/life)? Please suggest a good policy. I am interested in one time investment of up to Rs 4 lakhs.

Srikanth Bhagavat answers, Met Smart Plus or Bajaj Unit Gain B or HDFC Unit linked endowment plan.

Srikanth Bhagavat says, Thank you all! I believe my time is up!

Part I -- How to secure your child's future