What to do with Reliance Health Insurance??

One Reader Mr.S wrote  "I am regularly paying annual premium in Reliance Health + Wealth  plan for the last four years. The fund value at present is equal to the premium paid. The lock-in period of 3 years is over. I am getting income tax benefit with this plan. Please advice me which is better-- to pay further premiums or withdraw partially and invest in MFs? My family did not have any hospital benefit claims till date from this policy."

SRIKANTH SHANKAR MATRUBAI REPLIED  :

This policy is a combo of usual mediclaim policy & ULIP. This Policy combines health insurance with investment and pay back an amount at the end of the insurance term. The returns of course are dependent on market performance.

Being a ULIP the charges are pretty high.

The Fund Value would depend on the performance of the investments made by the fund. please remember that the fund charges here in this fund are different and hence, a combination of simple Mediclaim policy and Mutual Funds would be a definite winning combination

Just investing for sake of Income Tax benefit is a wrong idea.

And moreover, you will not get very little profit out of it, you have already completed locking period of three years, so  better you come out of this and seriously consider investing for long term in MUTUAL FUNDS, you will get much better profit out of your investment.

It is always advisable to go for a Pure Health Insurance Cover and a Term Plan.

For returns, mutual funds are the BEST alternative.

WHAT TO DO NOW??

1. Ensure you have a cost effective Term Insurance Plan.

2. Surrender this ULIP, and invest into good MFs for the purpose of long term investments.

The same effect of mediclaim & saving can be achieved by purchasing a cheaper mediclaim policy as well as investing the surplus amount as per our comfort level in Eq. or Debt funds or anywhere else. So this policy should be avoided by Short Term and Medium Term Investors.

Only very long term investors who are salaried people can look at this policy and that too in Moderation. They can also have a serious look at ICICI HEALTH SAVER which is more or less similar.

My choice for Health Insurance would be a toss up between Max Bupa Heartbeat and Apollo Munich Optima Restore.

For Term Plan, the choice would between Kotak Preferred Term Plan and Birla Protector Plus.

For mutual fund investments, Visit http://goodfundsadvisor.blogspot.com

A small story

Two People (Jeevan and Anand) working in a software company were traveling from Mumbai to Pune. They were getting late for their annual meeting and so they were rushing at top speed. They got on the express way and suddenly lost control resulting in an accident. Both of them died on the spot.

Jeevan and Anand both go to heaven and realize that now instead of getting late we are now Late Jeevan and Late Anand. After a few days they saw their families from the heaven. Anand had term insurance in place and so his family was taken care off on the other side Jeevan, while he was alive bought a few endowment and money back plans from his insurance advisor. His family was struggling.

On seeing this they requested god to give them one chance to meet their insurance agent. This was against the rules of heaven but still they were allowed.

They both sat in front of their respective agents and said the following:

Jeevan said:

Why you did not educate me about Term Plan?
Why did you sell me all the money back plans and kept me under insured?
Tell me now, who will take care of my family?
I have a request please only sell proper term plans to people and see that they are covered properly.

On the other side Anand was in a safe spot. He had his insurance in place still he wanted to meet his agent.

Anand with tears in his eyes gives a hug to his advisor and says:

Thank you my friend (advisor) for selling me Term plan
You really educated me on insurance and helped me buy the right cover.
Share our story with as many people you can and keep up the good work that you are doing.

They got a chance but in reality if something goes wrong you won’t get one.

Insurance companies never use the word Term Plan in any of their advertisements and so many people don’t know what Term Plan is. A lot of people are still thinking on buying a term plan. They are still not able to decide whether they should buy online or offline term plan. This story is an eye opener, many people who died at an early age would like each one of us to have proper life cover. And if you know about term plan please help people around you to have proper cover.

Thanks to my friend, Mr.Moolchand, who sent me this....

A real eye opener to novices.