I was asked a question regarding is it worth to buy insurance products coupled with the investment option. My answer was and is “NO”. I don’t like the idea of combining products. I prefer either to have insurance or investment and not both. I was thinking over this for a long time and here is my analysis towards it.
Insurance is a tool to leverage your risk and investment is a method of making your money work hard for you and it is risky you all know that. Now combining both the products means you are actually leveraging your risk by putting your money at risk. How can that happen? Does it make any sense? Most of them think it makes sense but according to me it is not a good option at all.
The insurance agent advices you that, invest “X” amount for “Y” years and you will get good returns and when they mention about the returns they claim to provide very good than actual. I am sure most of them would have just learnt these from the papers or some other source of information which may not be right. I am not against anyone or telling that the agents lie, they are just like us without much knowledge. You know the minimum qualification of insurance agent is 12th standard. According to me, these guys should learn more about finances and financial policy and then advice you to take up a policy and not suggest you one to buy just because they get enough money as commission. If that is the intension then I am sure you will realize what you will be getting. There are not many selfless people out there, I know that very well. Everyone has to survive and they have to make money but there should be some ethics in making money. I love money and wish to have loads but that does not mean I can go and loot the bank. Whatever the agents do sometimes is like looting us and I think it is not ethical. If someone who has just passed 12th and became an agent and started advising you about your finances then guess what he might be doing if he does not have good knowledge about the finances. If my guess is right, the one who took the policy is not so good with his finances or he is not keen on learning financial stuff. In short, it is a mess.
Don’t go by what others say. Just think over it. Try to realize what you actually want. Is it just insurance or investment? If it is insurance, take a product which is pretty good for you and investment just think over it and do it. Don’t be in a hurry to invest. Take your time. It is never too late and never too early. The world is abundant of opportunities to make it big and this is how I see this beautiful world.
Engineer's Finance 