Life/Health Insurance vs Investment Plans vs Bank FDs

Hello there, Need to find some info. Sharing your experiences would be really helpful.

  1. What is the importance of life/health insurance?
  2. Can anyone explain how can it be beneficial at an emergency?
  3. Can we think it as an investment? (Heard that it will offer some significant amount of interest)
  4. What is the best between two of follow? Life/health insurance or 5 million fixed deposit (10% ann. interest).
  5. Any experiences that you would like to share to help this post meaningful?

This question has been asked by a young person in an FB group. Can someone clarify this?

  1. If you work in a high risk or very volatile business environment, such insurance plan would save some of your present earnings for you and your family in the events of health and life-critical issues.

  2. Suppose you have a low income (e.g. daily wages) or all your income is saved in long term deposits, and you suddenly met with an accident or your immediate family got a life-critical health issue (e.g. heart attack) on a Friday evening. In such cases, if you have no way to get back your money from your savings or earn your wages on time, you/your family cannot pay for the expensive medicine, hospital charges, and special health treatments. In such scenarios, insurance cards come in handy because you just need to submit your card to bill counter and fill some forms, the insurance company will take care of your charges while you have a good rest or be busy with the family.

  3. Yes, you can mention your intention and get an investment-focused plan.

  4. Every company who offers insurance plans has a form of business that offers you separate wealth management and investment plans. If insurances are better in terms of profitability (plus they have health benefits), do you think that there would be a market for wealth planning business? So the answer is, insurance plans are not the best investment option. There are better ones.

  5. Given the benefits, I use insurance plan as quick fund to run few days or weeks at hospital and cover up my immediate expenses. It’s like my petty cash for health purposes. So I haven’t chosen the biggest plan, but a medium one that is good enough and am saving little in it and the major proportion of money goes to my other high-return investment plans :slight_smile: