Many times I heard people saying, ”Insurance is important. To leave something for your family so that they can survive even after you, is the feeling so pure & secure. Isn’t it? Zindagi K saath bhi, Zindagi k baad bhi” but why it is important? & What is actually term insurance?
Term insurance is the purest of life insurance which comes with financial security to your family in the form of life with a fixed duration But with the evolving times, insurance companies are providing investment plus insurance covers to their holders to attract the attention of earning that extra amount from their insurance premium.
You might think that “I am paying a premium in term insurance & if nothing happens to me, then all my money get wasted & if I get insurance as well as some return from my investment then what would be great than this?”
But my friend, this is a trap. Insurance should never be looked at as an investment policy rather it should be kept as insurance only. The endowment plans (Insurance + investment plan) provide an annual rate of return of 5-7% which is far far less than what is offered by investing in different options in the market. Even a low-risk bond provides a return of 9.01%.
So always try to keep insurance & investment as two separate things.