3 solid reasons why insurance is not an investment

Insurance is not an investment

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3 solid reasons why insurance is not your investement

[/fusion_title][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_text]

To start with let us first understand the difference between insurance and investment. Insurance is a medium of managing risk, and to get a safely cover for your dependents in case of a tragic event. Investment is meant to grow your savings at an acceptable rate in order to meet a major planned expense in future or to get financial security in future. Hope you are getting a faded idea of what is the difference between investments and insurance.

Now let us understand what insurance is, in India majority of the people who hold an insurance policy either hold it because of tax exemption or because they would need money for future commitments so they take insurance policy for meeting future expenses. The first reason to get insurance is acceptable but the later is not at all acceptable. For meeting future commitments investment is far better option than insurance.  Let’s see why insurance policy is not that great for meeting long term expenses.

[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_3″ last=”no” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_imageframe lightbox=”no” lightbox_image=”” style_type=”glow” hover_type=”liftup” bordercolor=”” bordersize=”0px” borderradius=”0″ stylecolor=”” align=”center” link=”” linktarget=”_self” animation_type=”bounce” animation_direction=”left” animation_speed=”0.5″ animation_offset=”” hide_on_mobile=”no” class=”” id=””] Low return on investments.[/fusion_imageframe][/fusion_builder_column][fusion_builder_column type=”2_3″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”solid” padding=”” margin_top=”” margin_bottom=”” animation_type=”fade” animation_direction=”right” animation_speed=”0.5″ animation_offset=”” class=”” id=””][fusion_title size=”3″ content_align=”left” style_type=”double dotted” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]1). Low return on investments.[/fusion_title][fusion_text]

When compared to debts, equities, gold and real estate the return on investment which is offered by insurance policy is too low. They give a return of not more than 10% annually. If you invest your money in the before mentioned areas then the rate of return would be anything around 40-70% minimum for a period of 10-15 years which is generally the insurance term. Always remember insurance is for cover and to protect the dependents and not an investment instrument.

[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”yes” overflow=”visible” margin_top=”” margin_bottom=”” background_color=”rgba(255,255,255,0)”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_separator style_type=”none” sep_color=”” border_size=”” icon=”” icon_circle=”” icon_circle_color=”” width=”” alignment=”” class=”” id=””/][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”2_3″ last=”no” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”solid” padding=”” margin_top=”” margin_bottom=”” animation_type=”fade” animation_direction=”right” animation_speed=”0.5″ animation_offset=”” class=”” id=””][fusion_title size=”3″ content_align=”left” style_type=”double dotted” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]2). Lack of transparency.[/fusion_title][fusion_text]

If you or your parents hold an insurance policy then you might have noticed that usually the insurance form is filled by the agent and you just sign wherever needed. We seldom care to read the ‘Terms & Conditions’ of the policy and tend to believe in the words of our agent. The problem arises here as some of the main aspects are untold by the agent and later on varieties of problem arise. This would never happen in case of the other investment instruments. Generally insurance are sold by highlighting the maturity benefits which are generally lower than other investment instruments as it also provide risk cover, hence too much we need to see risk cover and return on investments differently.

[/fusion_text][/fusion_builder_column][fusion_builder_column type=”1_3″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”solid” padding=”” margin_top=”” margin_bottom=”” animation_type=”0″ animation_direction=”down” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_separator style_type=”none” top_margin=”15″ bottom_margin=”15″ sep_color=”” border_size=”” icon=”” icon_circle=”” icon_circle_color=”” width=”” alignment=”center” class=”” id=””/][fusion_imageframe lightbox=”no” lightbox_image=”” style_type=”glow” hover_type=”liftup” bordercolor=”” bordersize=”0px” borderradius=”0″ stylecolor=”” align=”center” link=”” linktarget=”_self” animation_type=”bounce” animation_direction=”left” animation_speed=”0.5″ animation_offset=”” hide_on_mobile=”no” class=”” id=””] Lack of transparency.[/fusion_imageframe][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”yes” overflow=”visible” margin_top=”” margin_bottom=”” background_color=”rgba(255,255,255,0)”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_separator style_type=”none” sep_color=”” border_size=”” icon=”” icon_circle=”” icon_circle_color=”” width=”” alignment=”” class=”” id=””/][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_3″ last=”no” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_separator style_type=”none” top_margin=”10″ bottom_margin=”10″ sep_color=”” border_size=”” icon=”” icon_circle=”” icon_circle_color=”” width=”” alignment=”center” class=”” id=””/][fusion_imageframe lightbox=”no” lightbox_image=”” style_type=”glow” hover_type=”liftup” bordercolor=”” bordersize=”0px” borderradius=”0″ stylecolor=”” align=”center” link=”” linktarget=”_self” animation_type=”bounce” animation_direction=”left” animation_speed=”0.5″ animation_offset=”” hide_on_mobile=”no” class=”” id=””] [/fusion_imageframe][/fusion_builder_column][fusion_builder_column type=”2_3″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”solid” padding=”” margin_top=”” margin_bottom=”” animation_type=”fade” animation_direction=”left” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_title size=”3″ content_align=”left” style_type=”double dotted” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]3). High Costs.[/fusion_title][fusion_text]

When you decide to invest your money, the amount is usually in lakhs and so is the case with insurance policies also. The cost of such insurance policies are very high the main benefit here is that you need not pay in lump sum. When you calculate the premium amount over the years then the amount is actually very high and the rate of returns is also very negligible. If the same amount is invested in debts and equities in smaller portions like premium then you will be building a strong investment portfolio which would yield much more higher return on investment when compared with insurance.

[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”yes” overflow=”visible” margin_top=”” margin_bottom=”” background_color=”rgba(255,255,255,0)”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_separator style_type=”none” sep_color=”” border_size=”” icon=”” icon_circle=”” icon_circle_color=”” width=”” alignment=”” class=”” id=””/][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”solid” padding=”” margin_top=”” margin_bottom=”” animation_type=”bounce” animation_direction=”up” animation_speed=”0.8″ animation_offset=”” class=”” id=””][fusion_title size=”3″ content_align=”left” style_type=”double dotted” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]To Conclude.[/fusion_title][fusion_text]

Insurance is a must for every person who has dependents and they need security in case of some traumatic events. The early you apply for your insurance cover the higher would be the benefit. If you are taking insurance for tax exemptions then also it is fine. But if you are using insurance as your investment tool then it is not acceptable. The above reasons are fair to justify why insurance is not an investment.

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Published Date: August 1, 2016
Author: Valarmurugan

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