Money Matters

Life Insurance

Ajay Malhotra: I am 63 years old and in good health. Can I purchase a term insurance plan worth `1.5 crore at my age?

Prashant Sharma, Chief Investment Officer at Aviva Life Insurance, replies:

Term plans are taken to secure one's family from financial difficulties in case something unfortunate happens to the person insured. Even though the emotional loss cannot be compensated, it is important to bridge the financial gap that the family could be facing. Hence, it is important to know the liabilities/responsibilities and the gaps that will occur in your absence. Without this information, it is difficult to say whether you can or should opt for a term plan. But in case there is a reasonable gap, you may consider one. While you are at it, keep the following things in mind: Not many companies offer term plans at this age considering the high perceived risk. In fact, the premium will be quite high as you are 60-plus and extra premium could be charged due to medical reasons, if any.

Home Loan

Ramesh Sahni: I am 52 years old and my wife, a homemaker, is 47. We want to take out a home loan and purchase a property. Is it possible to get one with a tenure of 20 years? How can I raise a loan with maximum tenure?

Rakesh Singh, Director, Aditya Birla Housing Finance, replies:

It is always a good decision to buy a house. But in your case, it will be difficult to get 20 years as several factors determine a home-loan tenure such as age, profile, income capacity and the purpose of buying the property. However, you can opt for a financial institution that offers customised solutions.

Mutual Fund

Shilpi Gola: After the SEBI recategorisation, two of the funds in which I invest have been reclassified as value funds although they were multicap funds earlier. These two account for half of my mutual fund portfolio. Should I continue to invest in them for the long term?

Vidya Bala, Head of MF Research, FundsIndia.com, replies:

There are quite a few which have been reclassified as value funds. However, we do not know which ones you are holding. Some of them do not have pure value strategies and others do. Hence, it is difficult to take a call on whether to exit or not unless we know the fund details. In general, value funds can underperform in prolonged bull markets, and in India, such instances are higher than in other markets. You can consider limiting your exposure to this category to about 30 per cent of your holdings.