when combined, it will be known
as one plus one policy. Moreover,
to all my investors I usually suggest
buying term insurance with
accidental cover online as the rate
of premium will be lower in case of
buying it online.
Pankaj Ladha, Founder,
Pankajladha.com
Sanjay Ahlawat, Ghaziabad
My `2.5 lakh FD will mature
next month. Please suggest
how I can invest this
amount for a period of
one year and reap the
maximum returns?
It is good that you are planning a
re-investment option for your fixed
Rajan Awasthi, Bhopal
A friend has been diagnosed with terminal stage
cancer. Is it possible for his life insurance policy to
pay off before he actually dies?
Generally, in plain vanilla life insurance policies, the
insurance benefit is payable only upon the demise of the
life assured. However, in case your friend’s life insurance
policy has a built in or an additional rider for terminal
illness, the accelerated death benefits may be payable
either as a lump sum or in installments. In addition, if
your friend has an additional critical insurance rider or
separate policy, the benefits may be payable out of
the same as well, in addition to the life insurance
policy, and your friend may utilise the said amount for
his treatment.
It is unfortunate that your friend is undergoing such
a severe situation, however it is for the similar reasons
only that one needs to plan for life insurance holistically
at an early age while one is in pink of health to account
for such eventualities. While the mental trauma during
such unfortunate scenarios cannot be mitigated, the
overall mental state of the family could be assuaged
if there is availability of sufficient financial resources
for managing the treatment for the terminal illness.
Prashant Kapoor, CFP
deposit in advance rather than
waiting for the maturity of your
fixed deposit or for the auto transfer
of the amount in your saving
account where it may start earning
negative real interest rate, after
accounting for inflation.
In the current scenario, where
bank interest rates have been
on a downward spiral, it is quite
unlikely that you may find a similar
interest paying fixed deposit as
your last one. In addition, your
objective is to maximise your
returns, but your investment
period is very less at one year.
One option would be to compare
FD rates across banks for various
tenures and choose the highest
paying one for the period you are
comfortable investing for. Another
option would be to consider AAA
rated company fixed deposits,
which may pay slightly higher
interest rates but are riskier
investments than FDs. Third
option, which you may consider
are short term debt mutual
funds. While the returns are not
guaranteed in mutual funds, a
good short-term debt fund may
be able to provide you comparable
returns. Further, you may consider
investing in dividend option in
case you are in the highest taxation
slab since dividend distribution tax
may be marginally lesser than the
tax you may pay in other options.
However, marginal taxation
benefits should not be your sole
aim of choosing investment
options like debt mutual funds.
The ideal scenario for you would
be to link your investment to your
tangible goals which may increase
your investment horizon as well,
and accordingly if your investment
horizon is say five years, then you
may be able to look at higher risk-
higher expected reward, equity
linked investment options rather
than keeping yourself bound in
low returns debt options.
Prashant Kapoor, CFP
www.outlookmoney.com December 2017 Outlook Money
15