Opt for individual health cover, not family floater

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I owe Rs 1.5 lakh towards a personal loan and a credit card. Because of this, banks are refusing to sanction a home loan to buy a flat. Please suggest how to manage my dues and avail the housing loan.

If you have an overdue amount of Rs 1.5 lakh on your existing personal loans and credit card, you will find it difficult to get a home loan from anybody. If this amou-nt is just an outstanding and you are regular in paying your instalments, then you get a loan, but it will be reduced to that extent.

If I am already paying fees to the institute, can I get an education loan from any bank?

This is possible only by the way of refinancing within one month’s time. However, you can check with your bank regarding the terms of refinancing.

What is the ideal health insurance coverage?

The sum assured can be decided based on the number of family members that you want to cover under the policy and their age.
You need to estimate the cost that you expect on the treatment in case of any hospitalisation and also the amount of premium that you are willing to pay.
While calculating the cost of hospitalisation, you should keep in my mind the city you are staying, the hospital you would like the treatment to happen and various other factors. Given the rise in hospitalisation costs, it is essential to have a cover of at least `3 lakh for each member in the family. My advice is that you should preferably go in for an individual cover for each family member and not a family floater.

What should be the basis for selecting the policy term for life insurance? Should it be till one’s retirement or earning age?

The term for life insurance policy should be till earning age. Obviously, if you are very young (say 25 years old) and if your retirement age is 65 years, then you may have to opt for maximum available ten-ure as a 40-year policy tenu-re may not be available.
You can buy another policy with a higher tenure after a few years to cover the uncovered years.

Last year, I had purchased a life insurance policy. Recently, I approached the insurer for a loan against it. But I was told that the policy is not eligible for loan until three premiums are paid. Can I pay two premiums in advance and get eligible for the loan?

Most policies do not acquire a surrender value till they have completed three years (even if the premiums are paid in advance). So the answer to the question is no. You are not likely to get a loan on a one-year-old policy, even if you pay the premiums in advance.
Secondly, pure insurance (term insurance) has no surrender value and hence a loan against a term policy is not possible.
Thirdly, banks lend only around 40-50 per cent of the value of an equity fund (in a Ulip) and even for that the specific fund needs to be appro-ved by the bank.
Most banks would normally approve the equity funds of their own group’s insurance company.
Fourthly unless the first year’s premium has appreciated dramatically - I can’t see the rationale for a loan when you have the ability to pay two more premiums in advance.

Harsh Roongta is the CEO of Apnapaisa.com. You can send in your queries to movingmoney@deccanmail.com