Vinay P
1
Hi, I got to know that there exist Term Insurance.But 1 thing i need to know is what will happen to my investments(annual) towards the premium i pay for the term insurance plan i take once the policy period gets over.Will i get my money back? The reason i ask this is since i will be investing say 10000 p.a for 20 yrs which comes to 200000 lakh rs and if i dont get the money back...then its a loss to me.
Kindly guide me
Insurance and investment are two different aspects.
Insurance is for security/risk coverage and not about returns on investments.
Do you get any return back on your car insurance? Term insurance is pretty much a similar product. Did you ever asked your car insurance why don't I get whole amount back, in case I have not claimed in a year.
Term insurance comes at a cheap price and covers a person's liabilities, in case he/she is no more. No portion is premium in invested into any equity/debt product. In case something bad happens, dependent gets a huge amount so that they can live life happily thereafter too. No insurance other than term insurance can provide you such a large amount, which is enough for rest of the family for life.
Consider this, companies charge 10,000 per year and provide you insurance of 2 Lakhs and returns all money after 30-35 years with 6-7% return. You can get same sum assured from term insurance in less that 1/15 of price and can earn 12-15% return on remaining amount by investing in equity mutual funds.
Its just in mindset to think about returns only. But actually safety is much more important. If you want return why put money into insurance, rather invest in PPF, NSC, Equity Mutual funds, stock markets. There are 100s of different products, which you can choose to get returns, why insurance?
Think about a classic case of a young family which includes Husband 35 years old (only earning member, earning 70-80K per month), a housewife and two 5-6 years old kids. How much money will be sufficient for wife to take care of her kids (education, marriage etc) in case husband is no more?
