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Is it compulsory to take out a life insurance policy with a mortgage?

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The life insurance policy is a contract and once finalized it cannot be changed.

– Kamlesh Rao Q. I plan to purchase a ULIP plan. How much do I have to pay as a fee? Also, does it help build wealth in the long run? Answer: Broadly, there are four categories of fees in a ULIP plan: premium allocation fees, policy administration fees, mortality fees, and fund management fees. These costs vary from product to product and depend on the age of the policyholder. A unit linked plan is one of the most popular investment choices for long-term wealth building. In addition to investing, it also offers life insurance coverage as well as tax-free returns. Q. I would like to change the nominee in my insurance policy. How can I go about it? Answer: You can change the nominee for your insurance policy by sending an email request to your insurer or online on the company’s website. You can also visit the nearest branch of your insurer and make the request. The process will start after you submit a written request to modify the nomination with the reasons, name and relationship to the new candidate, and so will it. Q. I take out a home loan and have been recommended to take out a life insurance policy. Is it obligatory? Can I show my current policies to the banker? Answer: His own house or property offers immense security to those close to him. However, we must take note of the fact that life is uncertain, and we can never predict what the future holds. An unfortunate event can put your family’s financial future and lifestyle at stake. The EMI home loan can take a heavy toll. We must therefore understand that the stakes are high, and we must not risk it. It is always advisable to go for a life insurance plan and tie it to the loan as it will cover your mortgage debt while ensuring that the burden does not fall on your family in the event of an untoward event. However, it is not mandatory to take out a policy when taking out a home loan. You can either take out a new policy or assign an existing life insurance policy to the bank. Q. I plan to purchase a term plan. If I now opt for Rs 60 lakh coverage, can I increase the sum insured to one crore after a few years? Answer: The life insurance policy is a contract and once finalized it cannot be changed. Therefore, you would not be able to change the sum of the insured value of your policy, once finalized at the time of purchase. If you think you will need more coverage after a few years, you can opt for a higher sum insured now, at the time of purchase. Being younger you will get the policy at a much lower premium, which can be locked in for the life of the policy. Alternatively, you can also opt for the increasing sum insured option, in which the amount increases by 5% to 10% of the base sum insured each year. This will ensure that you are properly insured at every stage of your life. So, before purchasing the term plan, assess your current age, financial responsibilities, health, savings, and future life goals, and then decide on the appropriate sum insured. (The spokesperson is the Managing Director and CEO, Aditya Birla Sun Life Insurance)

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