1. Young earners should totally avoid traditional endowment, money-back and unit-linked life insurance plans, all of which mix insurance and investment inefficiently, as their life covers are woeful and their maturity amounts are barely able to take care of even long-term inflation.
2. Instead, they should buy term life insurance, for a better mix of a much lower premium and higher insurance coverage, as soon as they start earning.
3. Simultaneously, they should start investing in PPF/EPF, which also offer tax-free income, but whose interest rate is able to surpass inflation.
4. Even debt funds offer tax efficiency, as well as higher returns, where the income is treated as long-term capital gain after 3 years and taxed at 20% after indexation benefits.
5. Those who are equity-savvy can also systematically invest the annually "saved premium" in a multicap fund to earn higher long-term returns, or can invest in an ELSS fund to also avail annual tax benefits with similar growth potential.
6. Young earners saddled with such insurance-cum-investment policies should get rid of them by converting them to paid-up plans, surrendering them, or allowing them to lapse (all after 3 years) to prevent their hard-earned money getting wasted.
2. Instead, they should buy term life insurance, for a better mix of a much lower premium and higher insurance coverage, as soon as they start earning.
3. Simultaneously, they should start investing in PPF/EPF, which also offer tax-free income, but whose interest rate is able to surpass inflation.
4. Even debt funds offer tax efficiency, as well as higher returns, where the income is treated as long-term capital gain after 3 years and taxed at 20% after indexation benefits.
5. Those who are equity-savvy can also systematically invest the annually "saved premium" in a multicap fund to earn higher long-term returns, or can invest in an ELSS fund to also avail annual tax benefits with similar growth potential.
6. Young earners saddled with such insurance-cum-investment policies should get rid of them by converting them to paid-up plans, surrendering them, or allowing them to lapse (all after 3 years) to prevent their hard-earned money getting wasted.