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If you thought about this questions, most of the time people dont stop & think about it.
There is a generic perception among people to consider insurance as an investment vehicle. People expect something in return for the premium that is paid to the insurance company. Be it life, health or accident insurance, we always tend to equate and measure this with other investment products.If you are rich - let’s say if you die tomorrow and your family doesn’t need to worry about money - don’t bothering thinking about insurance.
Primarily insurance is not for you, it’s for your FAMILY, so its basically to take care of them in case you are not there to support them monetarily - income replacement. So let us if you are sole earning member of family and if you die, how do family sustain, hence insurance. So insurance is not investment, get that right now and for rest of your life, it can never be.
Insurance that come with investment plans give return in range of 2%-6% - that’s pathetic saving bank return, FDs give you more but it doesn’t beat inflation all the time.
Once a Person took advice from Moneymindz on insurance_policy where he had paid Rs 15000 for last 7 years (and continue for another 22yrs). if he dies any time (between 0–30yrs) his family would get Rs10,00,000/- . Now his monthly expenses are anywhere in region of 22,000/- meaning, if he dies tomorrow his saving would help his family survive easily for another 50months/4yrs, but what after that? Nothing..? Remember his monthly expense of Rs 22, 000 we have kept constant not changed, not taken into account inflation (regular increase in price). Add to that he has 2 kid of which 1 will go to school 2 years hence, so his expense would only increase from here on. Think about college expenses, you can’t do anything. Hence instead go for term policy of Rs1cr @ premium of 10,000. At least now he doesn’t need to worry too much.
If anybody sells your insurance because of superb returns, we suggest you immediately make 180 degree turns and run at fastest pace. It’s never possible to have good return in traditional insurance plan. Also if people try to sell you for tax purpose, term policy also provide tax benefit.
If you want a proper advice and not get cheated in buying insurance?
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