How to select a RIGHT life insurance policy?
The basic objective to buy a Life insurance policy is to provide financial security in event of the demise of an insured member. This is achieved by insuring the financial liabilities that an earning member is expected to deliver over his/ her entire earning phase. The policy is expected to compensate the loss of earnings, in event of loss of life, during the policy tenor (against the death benefit). Therefore, it is a PROVISION (made against loss of futuristic income), and shall NOT be treated as an investment (which is to earn returns). When trying to evaluate this, due to the expectation of direct returns, our selection tends to be biased. For example, Hybrid life insurance policies, offering returns in addition to life insurance, have become very popular because of such features. Our inclination to earn returns, under lucrative offers, easily diverts our focus from 'building a provision' to 'earn returns'. Since investment & insurance have different object...