1. Neither of them is recommended as they offer a sub-optimal combination of insurance and investment.
2. We end up buying them for the sole purpose of saving tax without giving much thought.
3. Also, these policies are pushed hard by agents as they involve attractive commissions.
4. Many people also see insurance as useless expense and hence they think it’s better to just buy a product that will give some return as well.
5. They fail to fathom that the kind of insurance coverage they give is simply not enough in the event of an untimely death.
6. A significant percentage of the premium paid, particularly in the initial years, is deducted in the form of various fees, charges, distributor commissions, etc.
7. This reduces the premium amount that is actually invested to generate returns, and over a long period, that makes a huge impact on the total wealth one is able to accumulate.
8. It is always better to keep insurance and investment separate by buying a term insurance with an adequate cover and putting the rest of the money in good diversified equity funds, or even a PPF if risk averse.
9. Insurance is an expense and it should be treated like an expense.
10. Don’t mix insurance with investment, as mixing the two will give you less than moderate returns from both.
7. This reduces the premium amount that is actually invested to generate returns, and over a long period, that makes a huge impact on the total wealth one is able to accumulate.
8. It is always better to keep insurance and investment separate by buying a term insurance with an adequate cover and putting the rest of the money in good diversified equity funds, or even a PPF if risk averse.
9. Insurance is an expense and it should be treated like an expense.
10. Don’t mix insurance with investment, as mixing the two will give you less than moderate returns from both.