when investment meets insurance …

      5 Comments on when investment meets insurance …

One of my regular ways of wasting time on the internet is reading about personal finance. Over the last couple of years, I have been totally convinced about the fallacy in “Jeevan ke saath bhi; jeevan ke baad bhi”. In general, any insurance scheme from any company, that promises you some kind of returns is simply not worth it.

I have managed to force a number of my acquaintances to see the light, or at least agree with me in saying that there’s something amiss about insurance policies the way they are advertised on TV. Here’s a set of articles that gives the broad picture, though:

Return of premium: What’s it worth?
This one is about how “money back” policies (from any company) are not as profitable as they seem.

Investments? Insurance? Or both?
A similar analysis of endowment policies.

Personally, these insurance policies disagree with my fundamental requirement that every rupee I save should continue to work for me, within reasonable parameters of risk v/s return. But on top of that, I suspect that these policies also actually lose money, once you bring inflation into the picture. Unfortunately I have yet to get enough insight to do an actual analysis of the effect of inflation, so it remains only a suspicion right now.

Here’s a bunch of articles on advise about how to approach insurance, whether or not one agrees with the articles quoted above:

4 common life insurance mistakes
Insurance: This time ask the right questions
4 ULIP ‘sales pitches’ to beware of
Mis-selling: ULIPs’ greatest bane
ULIPs? Read the fine print before investing

5 thoughts on “when investment meets insurance …

    1. sameerds

      Hmmm … consider diversified funds. Never understood the point of an Index fund!
      Current goal is to convince people who hold such combined policies to discontinue them! Most people think that now they are in, they must continue to maintain the policy. They don’t seem to know that there is a way to stop paying premiums so that the policy continues in a reduced form, or just completely surrender the policy and get some of the money back.

      1. Anonymous

        Ahho Bajirao, last week jo mujhse suna woh abhi LJ pe daalta hai 😉
        I discontinued my ULIP at the end of one year even though
        that money gets locked in for 3 years and life cover terminates!
        A clear argument in favor of this action: the units appreciated 9 pc
        (in a year that could be termed as the best year for all equity
        oriented stuff) when all MFs/ELSSs and their clones appreciated
        cool 40+ pc in the same year!
        -yogi (ppatil.wordpress.com)

  1. mandards

    Yep! Pretty convinced!
    Yes this guy has convinced me with this logic. In insurance + investment schemes either one loses the premium if one don’t die within the parameters of the policy or if one does die, then this nearest and dearest get either the insurance sum or the investment sum, whichever is greater but not the both.
    Why don’t you write an elaborate article on this ‘coz, people like me tend to outsource the analysis part and lap up the summaries 😀 Hence I doubt if such people will go through the links!


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