I got a lot of replies and counterarguments to this, so I'm just going to add a few crucial points, on why you should NOT buy this type of insurance plan (in fact ANY kind of life insurance, except term insurance.
https://twitter.com/ActusDei/status/1633998920224219136
First, flexibility. In insurance you sign up for a multi-year payment plan. Next year you could lose your job or you have some stress in your finances. Your agent will still ask for the premium. Surrendering a plan attracts huge charges. This is a major issue in insurance.
In fact if you look at something called the 5 year persistency ratio for the industry on average it is below 50%. Meaning half of the customers have dropped out of paying premiums by this time. In #mutualfunds you get FULL flexibility. Invest when you want, withdraw when you want
Second, interest rates are STILL going up. If they rise from here, buying this insurance policy will lock you into a lower rate. That's it. Done. Lost out. In a #mutualfund, you can do an SIP. If rates (and bond yields) go up, well an SIP will average it out. You'd be hedged.
Third, there is talk about getting life cover as a 'free bonus.' But many of us already have term insurance or we do not need cover - there are no financial dependents. Also, nothing in life is free, especially insurance
If insurance is a car, lift the hood. How is the insurer generating these 'fantastic' yields? By investing in government bonds. Well, you can buy the same bonds yourself through the RBI portal or at low cost through a debt (target maturity) fund. You don't need a policy. Period.
I don't generally ask anyone to share or retweet my threads - I feel that if a thread is good, people will do so on its merits. But given the history of insurance mis-selling in India, I think an exception needs to be made. Please retweet this thread for maximum reach.
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