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View Poll Results: What type of insurance do you have?
Pure Risk Based (please elaborate where would you rather put your money) 2 28.57%
Returns based 3 42.86%
Combination - please elaborate on percentage 2 28.57%
Voters: 7. You may not vote on this poll

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  #1  
Old September 1st, 2010, 04:35 PM
kkkk kkkk is offline
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Pure Risk insurance or insurance with returns

I have been quite traditional in opting for insurance. In fact I discovered quite late that pure risk base insurance has very low premium. Now I have started to think is it better to have a pure risk base insurance with a high sum assured and low premium. Any additional premium one pays to get returns are better invested in other areas like Mutual funds. On the other hand some also argue that pure risk based insurance, since it does not pay anything back, is not worth having - assuming everything remains alright until insurance maturity/expiry.
What do you think?

Last edited by kkkk; September 1st, 2010 at 04:38 PM.
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  #2  
Old September 1st, 2010, 04:42 PM
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Re: Pure Risk insurance or insurance with returns

Voted for "combination". Will think up some good reasons and tell u tomorrow
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Old September 1st, 2010, 09:47 PM
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Re: Pure Risk insurance or insurance with returns

insurance original purpose was to cover risk.
now-a-days with almost every investment instrument, they add some insurance coverage.
I have a combo.
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Old September 1st, 2010, 10:45 PM
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Re: Pure Risk insurance or insurance with returns

I have been searching various forums and blogspot, and first thing that everyone tells me is : "DO NOT MIX INSURANCE WITH INVESTMENT"

If you can identify between the two , you can easily earn more on this funda rather then mixing both.

Here is what I come across one of the reason :

http://www.indiastudychannel.com/res...e-avoided.aspx

This person has taken into account the PPF point , one can have more money if invested in MFs.
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Old September 2nd, 2010, 12:12 AM
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Re: Pure Risk insurance or insurance with returns

kkkk,

I was an actuary once. go for pure risk insurance. DO NOT MIX THE TWO. The Insurance People say that pure risk insurance gives no return. True. But this is how it works.

Say your premium is Rs 1000. They take the insurance cost out, say Rs 80. Then tey invest 1000-80. It is better you put 80 in insurance policy and 1000-80 in investment. It is the same thing. Yet, in a combo you lose. Why?

i) The first years commission on sales is 50% (Most people dont know that). That means that you pay 50% commission on your INVESTMENT portion too.

ii) Annual charges are heavy - 4-8%!!! They will say no it is not. But check out the charges in different names and add them - a)Polycy management charges, b) Fund Management Charges, c) Admin Expenses, etc. Most MFs have 1% charges

iii) Your agent will PUSH you for investment based insurance. Forget it. He gets 50% commission so he wants a higher premium product.

So, Pure Insurance is always better than Mixed Product. However, there is ONE case in which investment+insurance is better.

Suppose you are working and drawing a salary. Then you moonshine and get some extra money as CASH. Insurance companies accept money as cash. Any returns from insurance companies need tot be told to IT authorities. So many real estate magnates and diamond perchants used this route. But with terrorists too using this route, govt is clamping up.
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Old September 2nd, 2010, 02:19 AM
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Re: Pure Risk insurance or insurance with returns

Thanks guys.
Can you update if there is a difference in the type of insurance (except mediclaim obivously) between pure risk based and investment based? Is it just a traditional viewpoint that investment based insurance will cover more eventualities (accident, major illness, death by diff causes etc) or is there some substance to it?

also, (though I think I know the answer already) is it better to go for one time premium or yearly or quarterly etc?
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