Oct 13, 2004 07:03 PM
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(Updated Oct 13, 2004 07:03 PM)
The other day I read a review about insurance policies, & I would like to share my opinion about insuring oneself adequately.
When we pay insurance premium, there are 2 components to it; a part goes towards insuring our life [pure risk cover], & the other part is invested for the returns.
The actual premium to cover the life is very low; the more returns we want from the policy the more is the investment component of the premium, e.g. For a pure risk cover policy for 20yrs. for a sum assured of Rs.6, 00, 000/- for a 35 yr old healthy male is around Rs. 1600/- per year.
The point to note is that with such policies we do not get anything back at the end of the term if we survive, that is why these policies are not popular, but if we invest in a policy which gives us bonus, double returns etc. we have to pay more premium for the same sum assured.
Just think that if we invest the remaining part of the premium ourselves, say in equity or Mutual funds, the returns at the end of the term are definitely much higher.
This fact is mostly never revealed by our friendly neighborhood insurance ?consultant?, because the commission for such policies is very low!
So all my friends at MS reading this please insure yourself adequately without falling prey to ?investment policies? as insurance & investment are two different things & should not be confused.
