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I am 34 years old, married with two children. My monthly income is Rs 50,000. I am interested in an online term insurance and I have finalised a sum assured of Rs 1 crore. I have shortlisted Bharati AXA as it is charging minimum premium of about Rs 10,000. But I am anxious about their claim settlement compared to other companies. Please suggest?  

— Sujit Sharma

Term insurance is pure insurance and it is a must for every individual who has dependents. As the name suggests, it is for a specific term and you can choose the term. You can have a large sum assured at a very low premium. Term insurance doesn't pay any money if the insured survives. As far as claim settlement process is concerned, companies follow different rules. There is nothing good or bad about it. Bharti AXA is a good company and you have to check their claim settlement process. You have to understand that insurance sector is undergoing massive change and there have been lot of mergers and acquisitions in insurance in the last few years. This creates some temporary issues for insured as they have to deal with a new company. This sector is consolidating and there may be few more companies absorbed by other companies. However, IRDA, the regulatory body, ensures that people get their due without too many hassles.

I am a 26-year-old medical practitioner. I want to invest around Rs 2,000 per month in SIPs. But I am confused about how to choose which SIP to invest in. How can I invest in SIP? Do I need a Demat account? Which are the best performing SIPs?

— Dr Balanuj

Since you are just 26 years old, I suggest you opt for pure equity funds. Equity mutual funds invest their major share in equities and hence they provide better returns in the longer term. However, the value of equity mutual funds fluctuates widely in the short term. As you are quite young and your time horizon is very long, you will be able to build a good corpus. Typically equity mutual funds provide a return of 12 per cent to 18 per cent CAGR over a longer time. Opt for a SIP investment for longer term (8-20) years.You do not need a Demat account to start a SIP. You can simply contact any mutual fund company, fill up the form for investment and you are set. You have to also fill up a KYC form which can be obtained from the fund house. You can also contact a mutual fund advisor or distributor to invest in mutual funds. They will help you fill up the form and get KYC done.

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