Once we know that Term Insurance policy is the simplest and cost effective solution for our Life Insurance needs. The next question is how much cover do we need?
In my experience, I have noticed that majority of the folks are either under covered or have life insurance in excess. The answer is different for every one so we will try to find ways to determine an ideal cover for different situations.
I’m sure that somebody has already tried to sell you an Insurance policy (anything but Term) at some point of time in your life, actually it might happen multiple times. The worse is if we walk into the trap ourselves, in the hope for higher returns, guaranteed income or some savings on taxes.
I was at the bank yesterday and one gentleman walked in. He was a new customer that was going to bring in funds to the bank. While opening a savings a/c, he asked the customer service manager for advise about Mutual Funds. Lo and Behold, the bank rep immediately suggested a Life Insurance policy instead and started to talk about its benefits. Within no time, the customer was convinced. I sat there helpless, couldn’t do much as I was at the wrong place and at the wrong time.
These incidents are not new to me, I have been in that customer’s shoes long ago and continue to come across such situations with my friends and family where I have to warn them of these products. The Life Insurance policies are the worst investment products. They come in different packages such as Universal, Ordinary, Variable, Whole Life, all kinds of Annuities (USA), ULIPs (India) etc. I don’t think there will ever be an end to these. So what’s so terrible about them?
