Prioritizing Health Insurance

This is one of the rare posts on this site that is not about investing, wealth building or behavioral finance. And no, it is not a sponsored post either. I got a phone call from a friend last week. After the usual banter, he got down to the business at hand. He needed my advice given tax season was at hand. “I need to maximize my tax deduction and so need to invest some money. Can you help me identify the right life insurance policy to buy?” Normally I would point out that analyzing and investing in equities did not

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Insuring is not Investing

At a glance Most of us own atleast one cash-back life insurance policy bought early in our careers for the 80C tax deduction Insurance is a means of managing risk, meant to compensate your dependents in the event of a catastrophic event while an investment is meant to help grow your savings at an acceptable rate. Confusing insurance with investment is one of the most wide-spread mistakes The most prevalent insurance product, Cash-back policies that offer a lumpsum on maturity are the worst of both insurance and investing since they offer low death benefit to premiums paid and also sub-optimal

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