A pure term-insurance plan.
Don’t throw your hard earned money at any of these: endowment plans, money back plans, whole life plans, children plans, special plans for men, women, or whatever, and unit-linked plans. These schemes try to make a monkey out of life insurance by attempting to invest (and at times, gamble) on your behalf. You pay ridiculously high premiums for ridiculously low coverage.
Let’s not even get into the combinatorially exhaustive but mutually exclusive hare-brained riders available with these schemes. Dig into the website of any insurance company operating in India and you’ll know what I am talking about.
The Simple Dollar says it best:
Insurance as an investment is a great investment for the insurance company but a terrible one for you.
Here’s a simple set of questions for you to answer:
- How many among you were lured by the exotic sounding lacs-of-rupees/kickbacks -from-the-first-premium the insurance agent tempted you with while selling the policy?
- How many among you pay Rs.50,000+ as annual premiums just because the agent conjured up magical figures as income tax savings?
- Did you even know – or did the agent ever tell you – that there was something called as term insurance?
Be honest and drop a comment.
The idea behind life insurance is simple: you die, but do so without putting your family/dependents into financial hardship. You shouldn’t have to do that without having to first pay a fortune to the insurance company before you die. Unfortunately, the profit-minded insurance companies operating in India can’t understand this.
I’ve researched extensively on life insurance over the past month and have concluded that a simple no-frills pure term assurance plan is the best form of life insurance.
Don’t be taken for a ride. It’s your hard earned money.