With A Monthly Premium Of Rs.1000 & 5 Year Term, Which Life Insurance Policy Will Be Best For Me ? ?
Posted September 22, 2009 – 4:44 am in: term life insuranceLooking for a lump sum payment after 5 years. Policy holder is 19 years old.
Tags: Insurance, Life, Monthly, Policy, Premium, Rs.1000, Term, Which, With, Year
6 Comments
SS insurance is not the best way of investment…
A lot of us confuse Investment and Insurance. Investment is something that we save up to use while we are alive. Insurance is something we save up for our family to use once we are gone. The goals of Investment and Insurance are totally different. A lot of us take Insurance policies as investments. This is the reason why there are a whole group of people running behind us
telling us how great their new Insurance policies are.
Let me explain with a simple arithmetic. Assuming you pay an Insurance policy premium of Rs. 25,000/- for a policy that would mature in 20 years The Insurance agent would have told you that the policy is worth Rs. 5 lacs and you would get a bonus amount equivalent to it and hence you would be getting Rs. 10 lacs at the end of 20 years. This is a big amount and obviously most of us would be lured into taking this policy. What do we forget here?
1. A fat portion of the premium we pay in the first few years would be paid to the agent as a commission
2. Every year a portion of your premium (Atleast 2%) would be paid to the agent as a commission
3. The Insurance company would deduct a portion of our premium (Atleast 5%) as mortality charges.
4. The Insurance company can invest only in debt instruments and hence the returns on our investments cannot exceed 8 or 9 % per annum.
Assuming you invest the same Rs. 25,000/- every year in a bank Fixed deposit that earns an interest of 9% per annum, what do you think will be the maturity amount? You wont believe me. It is Rs. 13,62,745/- which is Rs. 3,62,745/- more than what your insurance policy would give you. (Assuming what your agent said was true and you would get Rs. 10 lacs)
You will be wondering how this amount of more than Rs. 3 lacs got reduced. The answer is simple: “COMMISSION”. Your Agent eats this amount from your investment and hence you are getting only 10 lacs.
What is Insurance?
Insurance is nothing but an agreement between the insurer (The Insurance Company) and the insured (You) to pay an amount as compensation if any unexpected event occurs. This amount may vary from a few hundred to even a few crores. The maximum amount the insured person can claim depends on the amount agreed upon as per the insurance policy.
So pls dont confuse investment and insurance…
For more details on what is insurance and how much of insurance you need pls visit: http://anandvijayakumar.blogspot.com/200…
If investment is what you want we can work out a nice investment plan that can give you a nice return on your investment.
Cheers,
Anandhttp://anandvijayakumar.blogspot.com
mail me at anandvijayakumar@ymail.com if you need any more details.
Go for Endowment. The payment is lump and your intention is for saving.
Since it is a short term policy approximately you will get half the amount as addtional amount. Suppose you have invested Rs.10000 in 5 years, you will get back around 15,000 (conservative)
What does a – 5 year term – insurance mean? Do you understand the meaning of insurance?
Do not think of Insurance as Investment. The purpose of Insurance is not Investment. Don’t beat the purpose.
Dont mix up insurance and investment. take an insurance sheme with lowest premium and maximum period of coverage. then invest the rest of your money in money multiplication schemes or FDs
YOu are not the only one who met this problem,I have met this type of problem before.I have good experience here http://www.insuranceidea.info/free-insurance.htm to solve my similiar problem.
If a genuine interest and you are from Mumbai, then you mail me on gadiyarsp@yahoo.co.in
A suitable policy has to be worked out depending on various factors.