Mistake we make while choosing Insurance Product:
In India most of the people take Insurance product for saving Tax.
It is one of the option for saving tax but purpose of Insurance is totally different.
Government give tax benefit to promote insurance product.
Actual purpose of insurance is to spread the risk .
It means that the premium paid by different people will be paid to the person in event of death or loss.
In other words we can say that we should take insurance keeping in the mind our family members .
Although insurance is one of tool for tax saving and wealth creation .
But actual purpose is to protect the family in event of death or protection against loss.
It is observed from the insurance data that most of people in India are not insured or under insured .
Example : If a person earns Rs. 50000.00 per month and family expenditures are Rs. 40000.00 per month then he should take theinsurance for the amount which can give returns equivalent to Rs. 40000.00 per month to family in event of death .
Here returns in aforementioned example refers to interest earned on claim settlement amount ( Sum Assured payable on death ).
Hence anything below this amount will be under insured.
There are lot of Insurance product in the market like money back plans,
ULIP plans etc . These are non actual insurance product . In actual these
are wealth creation product .
We should choose Term Plans to achieve objective of Insurance .
In Term Plans Sum Assured is at very high side and you will get nothing in return except in event of death .
But in term plan your family will get sufficient fund in case of death and
it will help family survival .
Now we come to another point .
If you still interested in wealth creation
then we suggest to go for term plan along with any investment product like SIP , NSC , RD , Fixed Deposit etc.
If you will combine both then you will be perfectly insured and return will be higher as compare to money back and other policies as premium for these policies is at
higher side .
If you are looking for ULIP then you are advised to take SIP and term Insurance
product.
As SIP + Term Insurance is better and suitable option than ULIP .
-- SK Sharma, CM, BOI
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