Khota Paisa

Which Insurance Policy is The Best?

Posted in Insurance by khotapaisa on July 4, 2009

I have been seeing a lot of questions on the lines of “Which policy should I buy? LIC jeevan shree, SBI shield or Jeevan Varsha.”. Without going into details, I can state few thumb rules for selecting insurance policy.

1. If you have no insurance or less insurance, then buy a pure term insurance.

2. If you have  sufficient insurance (for this go to rule 1) you don’t need to buy insurance anymore. People typically buy insurance to get assured returns. But what they don’t realise is that there are better assured return products than insurance. The assured returns from insurance is typically about 3-5%. Infact, most of the times a simple FD is a better choice.

3. You may (i recommend for most people) buy ULIP product if your goal is longer than 10 years. It gives you a combination of pure term plan and mutual fund (protection + investment). But remember that it is costlier and hence only for those you don’t have means or discipline to invest regularly.

4. Unless you have a very specific need (and believe me you have no such need), don’t buy any non-ULIP (classic) insurance(i mean endowment, moneyback etc.) policy.

5. Don’t buy insurance if all that you want is safe investment.

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2 Responses

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  1. Shreeniwas said, on July 18, 2009 at 10:09 am

    Dont buy a non-ULIP plans??
    In another of your articles you propose to buy term insurance.

    • khotapaisa said, on July 18, 2009 at 10:50 am

      By non-ULIP I mean endowment, moneyback type policy not the term policy.


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