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POSTED BY ON February 6, 2013 10:00 am COMMENTS (5)
A number of financial experts advice a common man to go for a term plan and not to put in money in an endowment or traditional plan with money back guaranty. I would like to ask if there are any financial profiles for whom these products are suitable and useful. Is it the case that everybody should go for a term plan and the endowment policies are never useful?
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Dear Abhyankar, can you elaborate more on your prev. reply as I’m unable to understand it?
Thanks
Ashal
In other words, its only term insurance and collect enough money to serve you if you survive the term. Right?
Dear nsabyankar, once in a while LIC do announce some policies which are useful for HNIs & Ultra HNIs. Here the whole set up is created in such a manner that the post tax effective return is beneficial for such super rich people.
Please check LIC’s Jeevan Astha & Jeevan Varsha policies for this.
Thanks
Ashal
one more step may be added: have a health insurance
Endowment policies are not useful because their returns do not beat inflation and therefore you are unlikely to meet your financial goals.
The road to financial health begins with these simple steps:
1. Get enough pure term life insurance
2. Keep contingency money equivalent to 6-12 months expenses
3. list all your short and long term financial goals.
4. Decide your asset allocation (% in equity and % in debt investments) and start investing accordingly.
This is for everyone irrespective of their financial profiles.
Never mix investment and insurance. Its like drinking and driving. You will reach somewhere but it may not be home!
To calculate the insurance sum you need you could use:
http://freefincal.wordpress.com/insurance-calculator-for-the-young/