I aint no expert on personal investing. But I have always been amazed at the manner in which insurance policies are sold (& more importantly, bought!!) in India.
Quick step back to basics- Objective of insurance is to provide dependants with savings in the event of any untoward happening. THAT's IT.
This is achieved by the classic Term insurance policy- In such a policy, you pay a premium which covers you for anything untoward. If nothing like that happens, you dont get money back.
Then, there is the range of policies from endowment to money back to spurious unit-linked stuff in which you get various sums of money back in case the untoward event doesnt hapen.
Let me look at some premiums for these various kind of policies.
Assumptions: Age: 30
Sum insured: 1 cr
Tenor: 15 years
Premiums p.a.
Term - 30k
Endowment - 6.5 lac
Money Back- 10 lac
Unit Linked- Something devilish like 20 lac
I hope the numbers speak for themselves. In the effort of getting money back, you end up paying disproportionately large sums of money for the same sum insured.
Net-net, you end up under-insuring substantially. For a premium like 6.5 lac you could get much much much more sum insured cover in a term policy . This is a big worry in case something untoward happens (which is why you buy insurance). To achieve investment gains, there are many other products from equities to MFs to real estate to what not- get investing gains from those, not from insurance.
Of course, the agent will sell the costlier ones since his / her commission is linked to the premiums. Please do not wrongly under-insure. If insurance, then go for the simple term insurance.
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