Financial Protection That Prevents Wealth Destruction
Insurance isn't an investment - it's a hedge against catastrophic financial loss. Term life insurance costs a fraction of traditional policies while providing 50x-100x coverage of your annual premium, protecting your family's financial future if you die. Health insurance prevents medical emergencies from wiping out years of savings, with hospitalization costs in metro cities easily hitting ₹5-10 lakhs for serious conditions. Anyone calling insurance a "waste of money" hasn't watched a family sell property to pay ICU bills or seen children's education plans collapse after a parent's unexpected death.
Term Plans and Health Coverage Beat Investment-Linked Garbage
ULIPs, endowment plans, and money-back policies are trash products that combine mediocre returns with inadequate coverage. You pay 5-10x more in premiums for coverage you could get from pure term insurance, while the investment component underperforms basic mutual funds after deducting insurance charges.
The math is brutal - a ₹1 crore term plan costs ₹12-15k annually for a healthy 30-year-old, while a ULIP for the same coverage runs ₹1.5-2 lakhs with garbage 4-6% returns. Buy term insurance for protection, invest the difference in actual investment products. Health insurance should cover family floater plans of ₹10-25 lakhs minimum depending on city - medical inflation runs 10-15% annually.
Tax Benefits Don't Make Bad Products Good
Yes, you get Section 80C deductions on premiums and tax-free maturity on life insurance, but tax savings on a bad product still leave you worse off than paying tax on a good one. A term plan's tax benefit is secondary to its actual purpose - keeping your family financially secure.
Health insurance premiums get 80D deductions, but the real value is avoiding financial ruin during medical crises. Focus on adequate coverage first, tax benefits second. Most people are underinsured by 5-10x while holding expensive investment-insurance hybrids that fail at both jobs.
