Insurance policies

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When we sit in the car, first thing to do is putting the seat belt.When you are making your kid sit on a swing , you advice "hold firm". Why ? Its for minimizing the risk. If we take care of a risk of fall, why don't the life.


Tip 1. Everybody needs an insurance cover.
Yes, Everyone needs it .The coverage amount , years and type varies with the risk cover required.This is the only thing which you can do to help your loved ones to sail through.

Tip 2. Insurance is not an investment.
I do not think anyone will pay an extra amount to have seat belt laced with gold , or a seat belt with stereo controls. Why?
The purpose of seat belt is not that and there are good methods for stereo controls available in the market.Similarly the purpose of insurance policies are risk coverage and there are many other good investment instruments available.

Tip 3. Market linked Insurance Policies only for very long term.
Market linked Insurance policies are only for very long term (10-20 years)
These Policies popularly known as ULIPs are highly front loaded. If you pay 10k only 8.5k will be going to your account, remaining goes to various commissions. The commissions will reduce as time passes and will be profitable if your investment horizon is 10+ years.

Tip 4. Money back policies not better than any other type.
Popular belief is that Money back policies are better as you can fund the remaining premium with money you get back.
If you are not taking the money back, you will get better returns . You are taking some money which has potential to grow big .Also the premiums of such policies are higher.

To know further about other riskfree investment options read How to become a millionare http://tips-personal-finance-advice.blogspot.com/2009/07/how-to-become-multi-millionare-risk.html