Should Insurance ever be considered a good Investment option?
Why People buy an Insurance Policy in India?
- Deduction under section 80c of income tax,
- Life coverage
But is insurance really made for first 3 targets?
First thing to remember is that Insurance is not an Investment, Insurance is always to cover the risk of financial security incase sole earner is no more alive.
But anytime you contact a person for insurance, first thing he ask is Interest rate kitana hai?
Dont you think he is ignoring a very important thing here, instead of asking details about life coverage he is discussing interest!!! For interest there are better options but not for life coverage.
For Interest we have FD, term deposits, Debentures and many other financial instruments.
For profit we have Shares, real estate etc.
But for life risk we have only one option and that is Insurance.
Insurance is adviced because one need not be much financial literate to encash matured policy, but in case of other investments like real estate lot of difficulties are faced. And in country like India, beaurocrates without heart will even transfer the property without you knowing.
Insurance is not costly like real estate, not risky like shares and not uncertain like loan you make.
That is rights. Insurance is nothing to do with investment. And in India almost every insurance product is made keeping saving part in mind.
And if we see the mortality rate in India and developing country is really high. And its also city specific, so considering this insurance should be limited to cover only financial insecurity in case of death.
Surely Insurance is a good saving and risk management option, a lot of ULIP products give life cover with investment option.