What is Life Insurance?

Choose the best answer

1. It is an instrument to save tax
2. It is a long term investment
3. It is a savings plan
4. It is an instrument to prevent a financial setback due to the death on a earning member
5. All of the above
6. None of the above

If your answer is anything other than “d” read on.

The companies /banks/financial advisors are selling some products in the name of all in one which are extremely inadequate from all these respects. Insurance coverage is very low and insufficient and at the same time the returns are ridiculously low. It surprises me as how people even opt for them. The possible explanations are lack of time, deciding on investment products too close to the tax deadline of March 31, or just lack of awareness/knowledge.

Now a days we get term insurance. Basically in a term insurance is a product where there is money paid out only in case of an eventuality and in case the insured survives there is no benefit at all. The premiums are low and you will adequately be able to insure yourself only if it is a term insurance. You will be able to get a term insurance of Rs 1 cr for a premium of less than Rs 10,000 per your if you are about 30 years old. Remember the money you leave behind would need to serve your family and their objectives for their lifetime. It is impossible to achieve this with any ULIP or any other savings or endowment plan.