Whats your strategy when it comes to Insurance?
ULIP with life cover (the ulip returns outdo the insurance by the time the policy ends usually) Vs Term life
Health ( Family floater Vs Individual cover ) assuming no pre existing conditions
Sad that most if our gen lacks good insurance knowledge and penetration (this for me is a key aspect of financial Literacy!!)
Term always - cheaper and has more insurance coverage. With ULIP, forgetting the returns, the money that I get back will not mean much when I get it back because the expectation is that I’ll be earning more.
Buy insurance because you want to insure the folks around you to sustain the same lifestyle you gave them. At some point, if your net worth itself can provide that lifestyle, no point having the insurance.
A little retrospect: if I took a ₹5L policy in 1994 and got that ₹5L back in 2014, it wouldn’t have been that great an investment. Even if I got ₹10L back, that would effectively be some 4% returns (pre-tax).
But if I had taken a term insurance for the same amount, I’d have gotten a coverage of ₹50L. If I did pass away anytime until 2014, my family would get ₹50L. Which is still a big amount in 2014.
With health, some family floater insurances are valid only till the primary holder is alive. In such cases, it’s better to segregate as you’ll have to buy a new policy and go through the wait times if the primary holder passes away.
Get a consultation from Ditto to understand this. I’m not sure if there is regulation around this now or if insurance companies do it differently
ULIP is not considered a good strategy as it does not offer the best of both worlds. Only half of both worlds I guess. Having a good term policy and investing in MF is definitely a good option for young investors (+ stocks if you have the aptitude for it)
The 70/30 split in ULIP and the fact that it gets professionally managed for the 20-30 years we hold it for does make sense no? If u take the premium bit of ULIP and compare that with that of a term life insurance, u think it would be expensive?
As far as investment is concerned, please do SIP in Mutual Fund & for Insurance do Term Plan. Gone are the days when our parent used to do LIC, now if you see the return of any insurance is nearly 4~5 % only
Lic
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