I already have a Provident Fund account. Do I need a PPF investment too? My tax-saving investments are already taken care of through PF, ELSS, life insurance and NPS. —Siddharth Mathur
PF and EPF are similar asset classes whereby both provide a corpus for retirement and are used more as a retirement planning tool. PPF is a voluntary contribution and is a lock in of 15 years while PF is applicable for salaried employees wherein a fixed amount is deducted from salary and taken as contribution towards PF. It can be continued till retirement or till whenever the employee is in the employment. And in case the employee wants to enhance the contribution, he or she can start doing a voluntary contribution i.e. VPF. PPF is by choice while PF is not by choice and both offering similar structure, there is no need to start a new investment account in PPF. However, you can still consider opening a PPF account and deposit the minimum annual amount of Rs 500 to get the account activated and in case you leave the employment and are without PF then you can use your PPF account to your advantage. And the reason of opening the account with immediate effect is that the lock in period gets reduced over a period of time as after the lock-in period of 15 years the renewal is done in a block of 5 years thereby giving you access to funds and liquidity.
I am 55 years old. I own the house that my wife and I live in, and we have ample investments to last us till we are 70 years old, maintaining the current lifestyle. Do we need life insurance? If we do, should we have separate policies (my wife is 53 years old)? Are there any other policies that we should consider? —R. Prabhakar
It is good that you have provided enough to last for yours and your spouse’s life. However keeping it pegged till the age of 70 years may not be a feasible idea. As in the current environment when medical sciences are making rapid strides, the life expectancy of an adult can easily be much more and by the time you reach that age it could be much higher. So it is good if you provide for corpus after considering a longer life span. Insurances can be split in two parts- life and medical. The life insurance is to be considered provided you are the only earning member in the family and you need to enhance the corpus as well as there are dependents on you i.e. your spouse. Medical Insurance both for yourself & your wife surely need to be provided for and the sum assured also needs to be increased periodically as the health inflation i.e. cost of medical treatment is increasing every year at quite a high rate. You can evaluate the premium as well as the features to decide whether to go for individual cover or a family floater. In addition to this you can also consider House Insurance thereby covering your house against any mishap i.e. earthquake, fire etc.
Surya Bhatia is managing partner of Asset Managers
Queries and views at mintmoney@livemint.com