Is investing on life insurance better than other forms of investment

Wednesday, August 31, 2011

Is investing on life insurance better than other forms of investment


“Life insurance is a necessity and it is not an investment”, this is a statement often repeated by insurance agents. To some extent, it is true as well. People, who buy life insurance policy, are aware of the disadvantages of not having insurance, and they buy the policy to safeguard their life. Everyone should buy such a policy. There are definite advantages of purchasing a life insurance. 

It enables a person to save taxes. A tax structure is formulated in a way to encourage people to invest. Employees, in particular, choose life insurance policy to invest their hard earned dime. It works in two ways. Firstly, a person gets insurance and secondly, he also saves taxes. 

As long as a person is able to save taxes, an investment on life insurance policy is accepted, but some of the people buy a number of these polices. They look upon these policies as an investment channel. They have nowhere to invest and the easiest way would be to find an insurance agent, and invest on one of the life policies. Remember, it never works that way. 

Such investments don’t have any value. It is recommended that people should also use other forms of channels to invest their money. They can place their funds in the equity market. A certain balance is required while choosing investment options. It is wise to choose more than one basket to park funds. Insurance alone will not help a person to gain financial profit. Returns from insurance are very low. Funds can be pumped in the mutual funds market. A growing market can bring sufficient profit, if the funds have been carefully placed in the right mutual fund category. 

There are less chances of a loss with mutual funds, and the chances of a profit are much higher. There are other debt instruments, which again give more profits than what someone will get with investment on a life insurance policy. The best advice would be to invest on life insurance scheme only out of necessity, but never out of choice. Invest to safeguard your life, but never choose it as an investment portion, rather pump money on other investment source, which will likely give more monetary gains over a period of time.

However, it should be noted that life insurance is a must. People should never ignore it. It is a policy, which also helps a person to gain profit over a period of time. Though, the advice will be to not park funds on an insurance policy, just for the sake of investment.   

4 comments:

Adelaine Watson said...

Thus according ICICI Prudential Life Insurance, consumer awareness is of paramount importance. The company will go about this campaign with 10-12 insurance mantras. Let us hope this time consumers learn something and make informed decisions when it comes to buying Life Insurance.life insurance quotes

health insurance plans said...

Having life insurance can benefit you when you need it the most. Thanks.

Alex Stephen said...

Simply put, health insurance is protection against medical costs. The health insurance policy is a contract between the insurance company and an individual or family. The insurer agrees to provide specified health insurance at an agreed-upon price, or premium. Depending on your policy, your premium may be payable either in a lump sum or in installments.Boat Insurance Southern California

goldclark said...

Great site here. Many blogs like yours cover subjects that aren't found in magazines. I don't know how we got on 12 years ago with just magazines and newspapers.
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