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Introduction to Insurance
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We often hear the term Insurance.
But What exactly is Insurance?
The definition says:
a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.
So, from the definition, it is apparent:
1. Insurance is an arrangement (a contract actually)
2. Between you and the insurance company
3. That you pay premium amount at agreed terms
4. and in case of a specified loss, the insurance company pays you back.
There are two common insurance policies that every individual should have: Term Insurance and Health Insurance
Endowment Policy vs Term Policy + Mutual Fund
Conceptually Endowment plans are not wealth builders. Do not mix insurance with wealth building.
The best thing to do is a to take a good term policy and a good multicap mutual fund.
This way, you get better returns from MF + best coverage from term policy for the same premium that we generally pay for the Endowment policy.
Related Topics
- Insurance