Insurance is a Risk product and Return is just an Add-on

We need to understand that insurance is a risk product and investment or whatever return comes is just an add-on.

D K Mehrotra, Chairman, LIC says this in an interview with LiveMint

This really is a lucid explanation of insurance. But there are various reactions to this statement.

  1. The returns are piddly, very less and does not justify putting your money into insurance products.
  2. This piddly return is better than making losses in the stock markets.
  3. I put in my money in an insurance product because of my friend/relative/neighbour who is an insurance agent. Please don’t bother me with jargons.
  4. I get good service from my insurance agent and I care about that rather than returns.
  5. I really don’t know or care :)
What is your reaction? Do share.

 

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Ranjan Varma has written 477 post on this blog.

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.

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About Ranjan Varma

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.
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One Response to Insurance is a Risk product and Return is just an Add-on

  1. Insurance is a risk management tool which aims at providing the required risk cover with an “option” of savings,but is aggressively marketed by most Insurance Companies the other way round.. primarily as an investment product with features like guaranteed NAV, assured returns,loyalty bonus etc and an add-on insurance!Hopefully Budget 2012 with the clause that only life policies with an insurance cover of at least 10 times the premium will be eligible for tax rebate would protect investors from being a target of such mis-selling.

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