From My Desk
Date 05-May-2014
Subject Busting common investor myths on money matters - education Series 3
Details Myths > "Pure term insurance is a waste of money"

Reality > "It is more cost-effective than a policy with a maturity value"

WHEN WE make a payment, we are not satisfied unless we get something in return. This is why it is difficult to convince people to buy a pure term insurance. In a term plan, the entire premium goes into buying the life cover and you don't get anything back. Agents use this feature to brand term plans as a terrible waste. Instead, endowment policies and money-back plans are more popular among people, purely because they have a maturity benefit and offer something at the end of the term.

However, by seeking a return on your investment instead of protection for your family, you are wavering from the very premise of life insurance. Pure term insurance plan is the simplest, unadulterated form of insurance. If the policyholder dies, it pays out the sum assured to his dependants and helps secure their financial well-being. Other forms of life insurance are savings cum-insurance products, which give very low cover and charge huge premiums. A term plan and PPF combo works better than an endowment plan.
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