Insurance is sold in the name of Tax saving instrument or as an investment avenue. But what real benefit does life insurance bring?

We wear helmets to protect our head. Our body protects all our internal organs. Anything that is precious needs protection, even our dreams!!

Ambitious Dr.X, a famous paediatrician, built his home in a posh locality for which he had taken a big home loan. He was sure that his practice would grow and was determined to pre close in the next couple of years. As fate played, he passed away within a year due to a mishap.
Now the grieving family is facing a heavy loan burden amidst all the chaos.

Love of a dear Spouse or Parent can never be replaced. But a simple Life insurance at the cost of a few thousands every year would have saved the family from at least the financial burden.

Life Insurance (Sum Assured) should be able to cover the future expenses and all the other needs(not wants!)of the family in case of the breadwinner or primary earner’s demise.

We do not expect to have an accident each time we pay the premium for the car insurance. Rather, we are happy to receive a no claim bonus on the insurance. Why should a priceless life be any different from a car? 

Investment made into the stock market through any instrument like Mutual funds, direct stock purchases, Unit Linked Insurance Policy(ULIP) or NPS is an Equity investment.

When does Equity investment become risky?

1. You don’t understand how stock market operates.
Then it becomes a gamble. This is not a fixed income generating instrument. Stock market Returns depend on various factors like the companies you are invested in, the economy, investors’ emotions and time horizon of your investment, etc.

2. You depend on stock market for short term returns.
Stock market is a long term(at least 3 years) game. A good stock may not give you any return or even negative returns in a year. But on an average, it may have the ability to fetch an exorbitant return over the years.

3. You do not have patience.
Stock market is bound to move up and down, it is highly volatile. Equity can be a good investment, if one has the patience to sit through the tide.

4. You buy stocks on hearsay.
Not all stock advice is genuine or backed by research and analysis.

5. You do not have conviction in your investment.
Unless a thorough homework has been done before investing, it will be very difficult to hold on to investments in a volatile condition.