Life Insurance and Investment- Why it is not good to mix? ( Telugu)
Which Life Insurance Policies provide both saving(investment) and insurance?…
In this insurance, endowment, money back and Ulip policies provide insurance coverage as well some maturity at the end of the policy term.
These policies have both components that we are about to discuss in this article.
While at the same time, term insurance does not have any saving component in it, and it provides only insurance coverage to the policyholders.
Here, I will explain with two scenario examples.
Scenario 1) Endowment Policy( New Jeevan Anand) from Lic of India…
In this policy for 21-year-old person for 1 lakh insurance coverage for 15 years policy term premium is Rs.8225 per year.
Click this link to know the premium New Jeevan Anand Policy from Lic of India.
Present bonus for this policy for a 15 year term is Rs.41 per year.
Let’s calculate the maturity in this policy.
Maturity Formulae = No. of thousands in the policy(100)*total policy term(15)*bonus(41)= Rs.1,61,500.
So, for paying Rs.1,23,360, maturity amount received Rs.1,61,500.
If we calculate the interest rate or return you got from this policy is around 3% to 4% only. Click here to read the article about new Jeevan Anand interest rate.
In addition, 3% to 4% interest or return is very low when we compare it with inflation in India. Click here to read about inflation.
When it comes to 1 lakh insurance coverage, 1 lakh insurance is also not good to protect the dependants from the financial loss in case of your death.
Read this article about the life insurance coverage you required. Click here to read.
Scenario 2) Take Life Insurance and Investment(saving) separately…
In this scenario, If you take pure term insurance to protect your dependents for 10 lakh, the premium is Rs.2490 per year for 15-year term policy(Lic Anmol Jeevan). Click this link to see the premium.
In addition, If you invest Rs.6,000 per year in Public Provident Fund for 15 years.
The amount in PPF after 15 years will be Rs.1,70,000(based on the present interest rate of 7.6%).
If You compare, Scenario 1) with Scenario 2), In scenario 2, you are getting higher life insurance coverage and same maturity as you are getting in scenario 1).
Hence, Mixing Life Insurance and Investment(saving) is not good.
Instead of that take pure term insurance based on need-based method for life insurance and invest the balance in public provident fund or mutual funds based on your risk tolerance.
Read an article about Lic vs Pli- Which is best?. Click here to read.
Also, read agent, Sebi ria-who is best for you?. Click here to read.
Also, read the article about APGLI/TSGLI. Click here to read.