Which is the best Life Insurance Policy?

Hi,

My brother's age is 11 years. I want to take insurance policy for him so that when he enters the age of 17 years he can get some money for his education. Can any one suggest such insurance policy which at moderate premium of around 110-12 thousand and terms of around 5-6 years gives good return at the age of 17 years of my brother.

Plz suggest any other future or career plans also in this budget.

Thanks in advance.

As you have just 5-6 year time frame, no insurance policy is best. You will just be able to recover the cost in any insurance policy as they charge high initially.

Invest in any good mutual fund through SIP. As you can take comparitively less risk, I will advice you funds like HDFC Equity, Reliance Growth, HDFC Prudence for you.You can invest as little as 500 Rs in some of these funds.

I'm a financial representative and providing life insurance is one of the things I do for clients. God forbids if the breadwinner dies, where would the family be without life insurance? Life insurance can't protect you against harm or death, but it can replace your income. The problem is that many families that own life insurance don't have adequate coverage, but they pay lots of premiums for it. That's because they own the wrong type of life insurance. Take a look at the facts and you decide which product is the best:

Whole life insurance
1) Its level term to around age 100 that builds cash value.
2) Since it builds cash value, premiums are higher than term insurance that doesn't build cash value.
3) There is no cash value growth in the first 2 years because premiums are used to pay for the insurance and commissions to the agent.
4) After first 2 years, you are guarantee a rate of anywhere between 1-4% (varies between companies)
5) If you wish to take money out from the cash value, you have to borrow it and pay loan interest of 6% to 8%.
6) If you die someday, the insurance company keeps your cash value, but pays the death benefit. Death benefit will be reduced by any loans you taken from the cash value.

Universal life insurance
1) Annual renewable term until around the age of 100 that builds cash value.
2) Flexible premiums as long as there's enough cash value to pay for the insurance.
3) While premiums may remain level in the beginning, the internal cost of the insurance goes up every year. That means less and less of your premiums goes into the cash value. Eventually, the premiums you pay will be insufficient in the future to pay for the cost. What would happen is that you would either have to pay more premiums or a portion of your cash value will be used to pay for it.
4) Same cash value features as whole life.

Term insurance
1) Various of level term products to choose from (from 1 year to 35 years).
2) It does not build cash value, so premiums are initially lower than whole life and universal life.
3) Most term insurance are guaranteed renewable without providing a proof of insurability. If your health was to decline because of old age, you can renew your policy without any hassle.
4) When you renew, premiums will be based on your current age. So premiums will go up after the initial level term.

Those are the facts.

Personally, I have sold term insurance 100% of the time. Why? Its because my clients can get lots of coverage for low amount of premiums. Since premiums are low, I help setup investment accounts for my clients so that they can build wealth. If you had lots of money saved right now, would you still need life insurance? Probably not. But you probably don't have lots of money saved right now and if something were to happen to you, would your family be financially ok? As you get older and continue to invest, you may or may not need life insurance when it is time to renew the term insurance. If you were to invest $200/month for the next 30 years and the average rate of return in your portfolio was 12%, you would have about $650k saved for retirement. That's probably not enough to live on, but at least its better than having money sitting in a life insurance policy.

Which brings me to the next point. It pays to start saving early. The later you wait, the more you would have to put away to reach your retirement goal.

Just tell him not to die

Here are a few problems with your question.

1. Unless you are your brother's legal guardian, you cannot purchase life insurance for him.

2. You should never buy life insurance as an investment. If your premium is $100 a month, at least $50 will be used to pay for the insurance. The other $50 will be invested. You are better off putting the money into an investment account.

3. Since you have a short time frame, you don't many good options for investing. The most important thing that you want to do is keep your initial investment. You cannot afford to lose any of your investment. That limits your options to Money Market Funds, CD's and similar investments because these are considered safe.

It's been mentioned on here a few times, but if you want to save some money for your brothers education, don't buy an insurance policy. There are far more efficient ways of saving than a cash value on an insurance policy over that short of a time period. Over the long term, you can look at using an insurance policy as a tax shelter if you are in Canada, but I doubt that would be the best option in your case.

And to the person that said he sold term 100% of the time, avoid one trick pony sales people that only hauk one product. These are often individuals that start with a company that brings people into the business with no experience and tries to keep it simple for the sales person, so they create a sales pitch based on one product. Each type of insurance has it's purpose and each clients situation is different, so there is not 'on product fits all' solution. The Buy Term and invest the rest theory is seriously flawed....do your homework. Go to a financial professional that can provide you with different option and can explain why each option is good or bad, and which best suits your situation.

Long story short...look into some investment options...right now the market is pretty much bottomed out (in Canada at least), so it's the perfect time to buy

INS . IS NOT A GOOD PROPOSAL

A much better idea is to put that 110 thousand yearly premium into an investment fund for that time. Insurance companies will just rip you off.

First and foremost, life insurance is NOT an investment. Agent's selling it as such should be shot.

Put the money into a high yield savings or invest in anything that will get better than inflation. You do have a short time frame so be conservative.

to be frank. Zurich Life Insurance Company is the best. Oldest and toughest company. And that is proven

check out http://www.COMPAREusINSURANCE.com i have never used them for the purpose of investing in life insurance at a young age BUT they have offered me the BEST rates for the insurance i search for !

You can take the policy of TATA-AIG named FLEXI.
Gagan Agrawal
Senior Advisor
Tata-AIG Life Ins. Co.
0 98274-85633

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