One very popular blunder committed by common investors in India is - wasting their hard-earned money in insurance in the name of investment. This is due to our ignorance about insurance as well as investment. We should be well aware of the following basic things........
- Insurance and investment are separate instruments required for separate purposes.
- We should never mix insurance with investment or vice versa.
- If you want to get insured, then go for Term-Insurance.
- If you want to invest your money, then go for different investment vehicle available in market like Fixed Deposit, Term Deposit, Recurring Deposit, Public Providend Fund, Stock Market, Bond, Mutual Fund....... etc.......as per your investment goal.
If you invest your hard-earned money in " Endowment Insurance Plan" or " Unit Linked Insurance Plan", you are actually mixing insurance with investment. You will realise your blunder after 20-25 years during maturity of these plan. Your Sum Assured or maturity amount will fail to fight inflation rate i.e. you will simply lose your invested money.
You better put your money in Term-Insurance for insurance purpose.
Term Insurance
- It is a type of life insurance providing life insurance coverage for a certain period of time.
- It purely provides life cover and there is no question of savings or profit or return.
- A larger life cover is available at very low premium.
Insurance agents will never suggest you to buy term-insurance plan for their own interest. They will simply misguide you to buy Endowment Plan or ULIP for getting huge commission from the premium of insurance paid by us. These insurance agents are generally belonged to our relative-circle or friend-circle. So, we trust them or simply fail to avoid them.
Before putting our hard-earned money in things like insurance or investment, we should read and understand all scheme-related documents carefully. We should never trust the agents without examining the actual documents.
Warren Buffett said........." Honesty is a very expensive gift. Don't expect it from cheap people."
Happy Investing !!!
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