I want a cover of Rs 20 lakh as I feel my insurance is inadequate. Should I split the cover, with one half in a term plan and the other half in a Ulip?First, you have to understand your need for an insurance plan—is it purely for insurance, or is it a saving instrument, or both?
Term insurance plans would best cover your need for protection if you feel you are not adequately insured. These plans are generally for one year and have to be renewed every year. The sum assured is payable on death only, and that too if the death occurs during the specified term. The insured will not receive anything if he survives the term. As this is the most basic kind of insurance, all insurers have similar premiums. Also, the premium is lowest for such plans since it offers no other benefit.
Ulips, on the other hand, offer both insurance and savings, but require long-term commitment. The premium for the same amount of cover would be higher as it offers returns also. Investments in Ulips are subject to market risks and the amount accumulated at any time depends on the market value of units.
