Life insurance schemes are introduced for life coverage and to help the family in case of unexpected. But due to high agent commission, it is suggested as investment in indian market. High profile people in the society had been working as LIC agent. The people worked as LIC agent and explained the insurance as investment to middle class and rural background people. Term “investment” may be used to make them understand the insurance. People only investment in insurance and it is one of the financial mistake. But it is not an investment, it is life coverage.
Insurance is not an investment, it is life coverage.
The mindset still continues in indian market and people take more number of insurance for investment purpose. That is the reason that 43% of people has insurance policy, but only 2% invest in market. I have seen people take insurance policy for huge sum assured and pay their 30-40% monthly income as premium. It could be disaster in their financial planning.
The sad part of the stories is that only 2% of indian population invest in investment instrument. Remaining 98% think that saving instruments and insurance as investment and continue to put all the money in insurance.
The worst ever financial mistake of indian is taking inadequate or wrong Life Insurance.
Your insurance should not exceed 10% of your monthly income. Maximum 10% of your income for term insurance and life insurance. Keep the remaining money in investment portfolio and let it grow. The sum assured for your insurance could be your 5 years annual income. The scale for your insurance is maximum 10% of your income and sum assured in 5 years of your annual income.
Insurance premium should be maximum 10% of your monthly income.
If you have started investment in mutual funds or stocks, 5% would be more than enough. This 5% to 10% for life insurance and term insurance both. Diversify your money in proper investment instruments. Not only in insurance. Plan your investment in mutual funds, stocks and real estate. While consider the inflation, insurance returns is not great. It would help to adjust the inflation and not to beat the inflation in growing the money.
Investment is money in stocks, mutual funds, real estate or gold.
The mutual funds SIP considered as investment. The payment is same way as insurance premium. Monthly minimum 100 rupees to your SIP. It grows your money by investing in market. Let us start together the investment journey.