Insurance is supposed to arrange
for compensation in the event of damage to or loss of property or in case of death
of someone. Insurance in no way gives your return on your investments. Then why
should one mix up both investment and insurance.
Insurance should give a person peace of mind, that in case something untoward should
happen to him/her, their N.O.K. (next of kin) will get some money which will help them ride the rough tide. Whereas an investment helps a person achieve what he has dreamt of during his entire life.
happen to him/her, their N.O.K. (next of kin) will get some money which will help them ride the rough tide. Whereas an investment helps a person achieve what he has dreamt of during his entire life.
Simply stated insurance is
supposed to be used after a person’s death by his Next of Kin and the investment
returns are supposed to be used during one’s own lifetime.
When the aims of both the products are exclusively dissimilar, then why jumble up both.
When the aims of both the products are exclusively dissimilar, then why jumble up both.
Details on insurance can be read
on my earlier blog here.
Well, for the investments, there
are loads of other avenues to venture into; right from the post office &
bank term deposits to the stock markets of the world.
The whole thing about insurance is risk aversion /risk managment .It is NOT an investment plan .The way banks and agents market the policy makes you think that Insurance is some kind of investment/money growth plan.It is not.
ReplyDeleteInvestment and insurance are two separate and different things.
Insurance is all about covering your risk.Imagine you insured your car for say 10000 for a cover of say 5 lac and so on each year.Apply your brain.Will you get rich after a year.?No.Only in case the car meets an accident the insurer will cover you upto 5 lacs. and more over the life insurance industry in our great land INDIA is all based on our ignorance.Insurance ,per say, is not bad but we need to change our thought process.
The bottom line is-
NEVER EVER MIX UP INVESTMENT AND INSURANCE
good
ReplyDelete