{"id":1206,"date":"2016-05-02T08:27:16","date_gmt":"2016-05-02T02:57:16","guid":{"rendered":"http:\/\/trucompare.in\/blog\/?p=1206"},"modified":"2016-05-02T08:45:45","modified_gmt":"2016-05-02T03:15:45","slug":"are-you-still-buying-insurance-for-investment","status":"publish","type":"post","link":"https:\/\/www.trucompare.in\/blog\/are-you-still-buying-insurance-for-investment\/","title":{"rendered":"Are you still buying traditional insurance plans for investment?"},"content":{"rendered":"

I am still appalled to find many people still buying life insurance policies( especially endowment\/single premium\/money back) for the purpose of investment. When you are investing your money, you want to have returns that beat inflation\u00a0for a longer period of time. When you are buying life insurance, you are doing so to protect your family against financial distress in case of your sudden death! The two objectives have nothing in common.<\/p>\n

In India , financial advisors ( read insurance agents) sell these policies in name of tax saving,bonuses,long term returns etc. If you see the hard fats, most of such policies won’t yield you more than 5% in the long term. Let me give you an example:<\/p>\n

Lets look at a benefit illustration of LIC Endowment Plan:<\/p>\n

http:\/\/www.licindia.in\/New_Endowment_Plan_benefits_illustration.html<\/a><\/p>\n

As you can see, a 30 year old health male is paying about 2900 per Lakh of insurance. So what does the person get\u00a0@4% returns- 2.4 lakhs. (don’t even bother to look at 8% returns as LIC bonuses range between 3-5%). Now when people sell you this policy, then 2.4 lakhs looks like a huge amount at maturity but actually you’d have actually put about 90,000 as investment in this plan and you won’t even double your investment in 35 years! ( The reason for the same is the fact that the bonus is not compounded and the bonus rates are too low- thats double whammy for any long term investment!). Also not to forget- you can’t sell your investments for 35 years(unless you are willing to take a loss on your investments for a surrender value)<\/p>\n

Money back policies are even worst in terms of returns but play on the investor psychology of “getting his money back”.<\/p>\n

Now look at the insurance bit- by paying 2900 per annum, you are getting a cover of just 1 lakh whereas a similar sum can buy you a 25-50 lakhs of term insurance cover! Get a quote here<\/a>.<\/p>\n

So next time when someone coaxes you to buy a traditional\/endowment plan- ask him\/her these hard questions. This might be a good time to take a fresh look at your insurance and investment portfolio. \u00a0Also remember that money decisions are not to be taken based on emotions but based on data and your financial goals. You work hard for your money, let it work even harder for you.<\/p>\n

Also see- Are Endowment plans any good for wealth creation?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

I am still appalled to find many people still buying life insurance policies( especially endowment\/single premium\/money back) for the purpose of investment. When you are investing your money, you want to have returns that beat inflation\u00a0for a longer period of time. When you are buying life insurance, you are doing so to protect your family … Continue reading Are you still buying traditional insurance plans for investment?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9,2],"tags":[],"class_list":["post-1206","post","type-post","status-publish","format-standard","hentry","category-endowment-plan","category-term-insurance"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p3wDt5-js","jetpack-related-posts":[{"id":293,"url":"https:\/\/www.trucompare.in\/blog\/are-endowment-plans-any-good-for-wealth-creation\/","url_meta":{"origin":1206,"position":0},"title":"Are Endowment Plans, aka Traditional Life Insurance Plans, Any Good for Wealth Creation?","author":"Trucompare","date":"May 10, 2013","format":false,"excerpt":"Since most of the life insurance policies in India are still sold as \"savings and investment\", endowment plans( also known as traditional life insurance plans) are the most popular of the products. This trend was started by LIC of India ( oldest insurer in India) whose agents goaded investors to\u2026","rel":"","context":"In "Endowment Plan"","block_context":{"text":"Endowment Plan","link":"https:\/\/www.trucompare.in\/blog\/endowment-plan\/"},"img":{"alt_text":"TruCompare_head","src":"https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2013\/05\/TruCompare_head.png?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":503,"url":"https:\/\/www.trucompare.in\/blog\/why-term-insurance-is-needed\/","url_meta":{"origin":1206,"position":1},"title":"Do I Need Term Insurance Plans?","author":"Trucompare","date":"September 16, 2013","format":false,"excerpt":"A reader query: I am a 32 year old person working in the IT industry. I am already having insurance from SBI ( ULIP) and LIC ( endowment plan) with total premium of about 1 lakh per annum. I am not too sure if I should buy a term insurance\u2026","rel":"","context":"In "FAQ"","block_context":{"text":"FAQ","link":"https:\/\/www.trucompare.in\/blog\/faq\/"},"img":{"alt_text":"TruCompare_head","src":"https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2013\/05\/TruCompare_head.png?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":14,"url":"https:\/\/www.trucompare.in\/blog\/should-one-buy-term-plan-from-likes-of-lic-or-private-insurers\/","url_meta":{"origin":1206,"position":2},"title":"Should You Buy Term Insurance from LIC of India or Private Insurance Companies?","author":"Trucompare","date":"May 3, 2013","format":false,"excerpt":"One of questions often asked by clients while buying term insurance is- Can I trust private insurance companies or should I stick to government providers like LIC of India, SBI Life etc.? LIC of India has been the pioneer in the insurance sector and for many people in India life\u2026","rel":"","context":"In "Term Insurance"","block_context":{"text":"Term Insurance","link":"https:\/\/www.trucompare.in\/blog\/term-insurance\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1427,"url":"https:\/\/www.trucompare.in\/blog\/your-guide-to-buying-the-best-term-insurance-plan-in-2016-17\/","url_meta":{"origin":1206,"position":3},"title":"Your guide to buying the best term insurance plan in 2017","author":"Trucompare","date":"June 2, 2017","format":false,"excerpt":"Term insurance is the most important life insurance policy that we recommend to our clients. If you have bought a decent term insurance, then you probably don't need any other life insurance policy. Here is a quick guide to buying the best term insurance. Find how much term insurance can\u2026","rel":"","context":"In "Term Insurance"","block_context":{"text":"Term Insurance","link":"https:\/\/www.trucompare.in\/blog\/term-insurance\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":516,"url":"https:\/\/www.trucompare.in\/blog\/5-reasons-why-people-in-india-dont-buy-term-insurance\/","url_meta":{"origin":1206,"position":4},"title":"5 reasons why people in India don’t buy term insurance","author":"Trucompare","date":"September 18, 2013","format":false,"excerpt":"Being in the business of financial advisory, I find many intelligent and educated people who are without adequate insurance cover.Sometimes \u00a0one wonders why people don't buy term insurance in India despite it being such a cheap product. Here are some of the reasons: DO NOT FEEL THE NEED TO BUY\u2026","rel":"","context":"In "Term Insurance"","block_context":{"text":"Term Insurance","link":"https:\/\/www.trucompare.in\/blog\/term-insurance\/"},"img":{"alt_text":"TruCompare_head","src":"https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2013\/05\/TruCompare_head.png?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1226,"url":"https:\/\/www.trucompare.in\/blog\/should-you-buy-term-plans-with-return-of-premium\/","url_meta":{"origin":1206,"position":5},"title":"Should you buy term plans with return of premium?","author":"Trucompare","date":"May 7, 2016","format":false,"excerpt":"It refuses to amaze me how the insurance industry will try to complicate a simple product like a term plan. As Indians are not ready to pay for insurance and still view it is an investment, insurance companies have manufactured a product that comes with a return of premium at\u2026","rel":"","context":"In "Term Insurance"","block_context":{"text":"Term Insurance","link":"https:\/\/www.trucompare.in\/blog\/term-insurance\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts\/1206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/comments?post=1206"}],"version-history":[{"count":12,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts\/1206\/revisions"}],"predecessor-version":[{"id":1218,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts\/1206\/revisions\/1218"}],"wp:attachment":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/media?parent=1206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/categories?post=1206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/tags?post=1206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}