Answer to Question #149486 in Financial Math for Elsa

Question

Raj Shah, aged 36 years, is employed with a MNC. His wife Pooja, aged 34 years, is also working part - time. The couple has two children - daughter Rima aged 7 years and son Ansh aged 4 years. Raj and Pooja require your help to make a few financial decisions. (You can make any assumptions to further build up your case)

a. Raj and Pooja want to invest for their children’s higher education for the long term (over 12 to 15 years). Develop a plan so that they can accumulate a sufficient education corpus.

b. Raj wants to take a Life Insurance cover of Rs 1.5 crore. Advise him whether he should go for a ULIP or a term insurance.

Answer 1

а. first, decide on the educational institution, then decide on the amount of how much you need to pay for education. Then analyze your revenue and expenditure budget. And set aside a certain amount for a Deposit every month, like an annuity. Using the annuity formula, you can calculate the required amount of savings in each month

b. if you get life insurance, it's better a term insurance, because since the guaranteed amount is paid in the event of the insured's death. This option is more reliable. the first one depends on the market indicators, it is not long-term.