Money Matters

Health Insurance

Debjyoti Singh: My father, a retiree, is 64 and my mother is 62. Neither of them has health insurance coverage. My mother is also diabetic. Should I buy a health insurance policy for them or should I use that money to build a corpus for any medical emergency? What will be the premium for a health cover of `5 lakh?

Yashish Dahiya, Co-founder and CEO, Policybazaar.com, replies:

Your parents are already at a vulnerable age when you cannot time-bound medical emergencies. Building a corpus is only helpful in the long term when you have enough time to prepare for contingencies. Moreover, senior citizens are more prone to falling ill. So, it makes sense to buy a family floater for your parents. A family floater plan is a good option because in such cases, the chance of risk acceptance by an insurance company is higher.

For your parents, we would recommend plans like Max Bupa-Health Companion or Apollo Munich-Optima Restore. The premium for a cover of `5 lakh could be `43,000-49,000, depending on the plan you choose.

In case you want to buy a diabetes-specific insurance plan for your mother, there are several options in the market, including Aditya Birla Health Insurance-Active Health Enhance (Diabetes), Star Health Insurance-Diabetes Safe and Apollo Munich-Energy. The premium would range between `69,000 and `71,000. The USP of the Aditya Birla plan is the chronic management programme, which not only covers OPD-related expenses up to `15,000 but also offers a Health Coach to take care of the health of the insured member. For your father, we suggest individual plans such as Religare Health Insurance-Care with Unlimited Recharge or Apollo Munich-Optima Restore. The premium for these policies would range between `24,000 and `31,000.

Mutual Fund

Mukesh Chopra: I am a 50-year-old with a fixed deposit (FD) of `20 lakh which will mature this year. I want to grow my corpus further, but FD is not an option as the returns are extremely low. I am keen on mutual funds and would like to know which funds you would suggest. Should I invest in balanced funds?

Vidya Bala, Head of Mutual Fund Research, FundsIndia, replies:

If you are merely looking for an FD substitute, you should consider only debt funds. Short-term debt funds such as HDFC Short Term Opportunities or long-term income funds like DSP BlackRock Income Opportunities are good options. Always consider the growth option and not the dividend. If you are looking at a five-year-plus horizon, you can go for balanced funds such as HDFC Balanced or L&T India Prudence. A balanced fund predominantly invests in equity and involves all the risks of an equity fund. Also, you must not consider getting regular dividends from balanced funds. No fund guarantees it. Invest in the growth option and be willing to face short-term volatility in balanced funds. If you are investing in balanced funds now, it may be a good idea to invest through SIP/STP rather than putting in a lump sum amount.

Real Estate/Loan

Khus Thakkar: I recently took a home loan but had to buy property insurance along with it. The insurance has been added to the loan amount, and it seems an additional burden. Is it mandatory to buy such insurance? Should I buy it?

Harshil Mehta, Joint Managing Director and CEO, DHFL, replies:

Property insurance or any other related insurance is an optional product. But financial institutions often recommend that customers should insure their financial liabilities as it plays a critical role during a contingency. However, you can choose any insurer, and the policy can be assigned to the financier. Home loan insurance is important as it ensures that your family will still hold the valuable asset even if there is a crisis or an unforeseen situation.

Taxation

Pradeep Kumar Khilar: I am a salaried person earning `7 lakh a year. How should I invest to save income tax under sections 80C, 80D, 80CCD and so on? Also, where should I invest to optimise my tax planning?

Ashish Shanker, Head, Investment Advisory, Motilal Oswal Private Wealth Management, replies:

Tax planning is an important aspect that should be on every investor's checklist. Therefore, it is a good move on your part. If you are keen on capital appreciation, good quality equity-linked savings schemes (ELSS) are useful to stay invested in equity and save tax at the same time (up to `1.5 lakh per annum under section 80C). In this space, we would recommend ICICI Prudential Long Term Equity Fund (Tax Saving) Growth and Reliance Tax Saver (ELSS) Fund-Growth. Compared to the public provident fund or a national savings certificate, ELSS has a lower lock-in period of three years. If you are starting young, a higher equity allocation should not be an issue. Other options include the National Pension System (it is a mix of equity and debt but has a higher lock-in period), term insurance and medical insurance to protect self and family or to purchase a property where you can claim the principal portion of your home loan.