NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Insurance
Caselet: Mr. Karan Joshi's family needs funds if he dies. Needs: Rs 30 lakh to repay a home loan, Rs 50 lakh for children's education and Rs 70 lakh as a corpus to fund family living costs. Existing assets earmarked for these goals: financial assets of Rs 40 lakh and an existing term cover of Rs 25 lakh. Using the need-based approach, what additional life cover is required?
The additional cover required is Rs 85 lakh. Total needs of Rs 150 lakh are reduced by existing resources of Rs 65 lakh (Rs 40 lakh assets plus Rs 25 lakh existing term cover), because the need-based approach covers only the shortfall.
- ARs 150 lakh
- BRs 110 lakh
- CRs 85 lakhCorrect
- DRs 65 lakh
Explanation
Total needs = 30 + 50 + 70 = Rs 150 lakh. Resources = 40 + 25 = Rs 65 lakh. Additional cover = 150 - 65 = Rs 85 lakh. Rs 150 lakh ignores resources, Rs 110 lakh subtracts only the financial assets, and Rs 65 lakh is the resources figure itself.
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