Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

Rajesh, aged 40, earns Rs 20 lakh a year and has a home loan, two dependent children and a spouse who does not work. His only life cover is a Rs 25 lakh endowment policy. Using a simple income-replacement approach, which recommendation is most appropriate for his protection gap?

Rajesh should buy a pure term plan sized to cover his loan, family goals and income replacement. Term insurance gives the highest cover for the premium, and the small endowment policy does not close the gap, while ULIPs or child plans give inadequate protection.

  1. ASurrender the endowment policy and rely on the spouse's future earnings
  2. BBuy a pure term plan sized to cover loan, goals and income replacement, and retain the existing policy unless it is clearly unsuitableCorrect
  3. CReplace the cover with a single-premium ULIP of Rs 25 lakh
  4. DBuy a child plan and treat it as full protection for the family

Explanation

The gap is large relative to income, loans and dependants, and term insurance gives the most cover per rupee. The spouse does not work, so option one is wrong. ULIPs and child plans give low cover relative to need.

Did you get it right without looking?

One question tells you little. A timed set on Case Studies in Comprehensive Financial Advice shows your real accuracy, how long you take and where you lose marks.

Practise Case Studies in Comprehensive Financial AdviceFree diagnostic mock

More Case Studies in Comprehensive Financial Advice questions