Insurance is a subject matter of solicitation

Life Insurance against your property purchase

Insurance is a subject matter of solicitation… really? In my experience there is a push from the insurance company selling you their insurance products.

Disclaimer: The below expressed views is purely my personal views & I strongly believe in it.

Getting back to the topic, most of you who have purchased or in the process of buying a house/ flat would surely want to cover your life to make sure you protect your dear ones after you. Almost all the bank would have a tie up with some insurance company & they would hand over an insurance application form along with loan application.

I fully support, getting life covered against the value of your property. Let me share my views & options you have with an example.

Mr. You buys a flat for Rs.1.2 Cr & takes a loan of Rs.1 Cr. Risk coverage required Rs.1 Cr. Assuming loan tenure is 15 years @ 10% interest rate

Mr. You has 3 options a) Not buy life insurance b) Buy an insurance by paying 1 time premium c)Buy a simple vanilla term insurance paying yearly/quarterly premium. Which one of these options should you choose?

Option a):  Only if you are well cover which is not the case in most of the time. So, it boils down to option b & c.

Option b):  An estimate of 1 time premium would be Rs.2 Lakhs to be paid on Day Zero for Rs.1 Cr life cover

Option c):  An estimate of Rs.15k/year or even less (check policybazaar.com) for simple term insurance

Pros & Cons of option b

1.       1 time premium is heavy on pocket but easy as bank gives you a loan for this & meets the objective.

2.       On a flip side- you end up paying EMI of Rs.2150 per month (Rs.25800/year, Rs.3.87lakhs for 15years) for this Rs.2 Lakhs premium that you paid on day zero

3.       In option b, your risk coverage is caped to balance principal outstanding (let’s say you kick the bucket when the loan outstanding is Rs.75 lakhs, insurance company will settle Rs.75 lakhs to the bank, all your nominee will have to do is inform the bank & sign few documents).

Pros & Cons of option c

1.       You end up paying yearly or quarterly premium, you risk in case you miss paying an installment.

2.       Not so heavy on pocket as you are paying this each year & also the premium is much lower (approximately Rs.15k/Year, Rs.2.25Lakhs over 15 year not on Day zero but in installment)

3.       If you think you can’t remember paying premium regularly on time, you can opt for ECS (saving account or even Credit card)

4.       In the event of death, your nominee submits claim with insurance company, insurance company pays your nominee Rs.1 Cr & nominee will pay Rs.75lakhs out of Rs.1 Cr claims settled to the bank & close the loan.

I am not an expert & may be my assessment is incorrect. Please do express your views or disagreement if any.

I sincerely request everyone reading this to do an independent evaluation and action based on what suits your requirement best.

Vision of Mr. Blind

Vison of Mr. Blind

I still recall the day; a blind man shared his vision with me. Almost a decade ago when I drove my mom to her Bank & I saw this old blind man selling Jhola bag. I went to him & asked, how much does the bag cost & he replied Rs.50/- (less than a dollar). It was a very ordinary looking bag but a strong one & nothing fancy about it. I paid him a little more than his quote & walked towards my mom. My mom asked me why I needed a bag like this & how much I paid for it.

It’s been 10 years & the bag is still going strong. I use is normally when I go on my bike to any stores nearby. This Jhola bag is now dirty & I guess it’s time to discard it & get a new one.

Now, let me share few statistics of the usage of the bag. On an average I used this bag thrice a week (once on weekday & twice on weekends)

10 years X 52 weeks X 3 avg = 1560 times in 10 years

Meaning, 1560 plastic bags less consumed by 1 single person. Imagine what would be the contribution every one of us can make as a team.

Even if one third of India’s population shares Mr. Blind’s vision, it would reduce ~624billion plastic bags consumption in a decade.

Well, I am not here to tell you the negative impact of plastic bags & the pollution it creates. I am here to share The Vision of Mr. Blind, which we ignore blinding ourselves in everyday life.

#Swachh Bharat Abhiyan is not just about cleaning your city but more about not creating mess.

Thank You Mr. Blind for showing me the path

Carry a Bag & don’t ask for Carry Bag

I am doing my bit, Are you?