Importance of Term Insurance

I want to know about the term plans offered by HDFC and ICICI Prudential. Please also tell me which kind of mutual funds I should invest in.
-Dharmendra

Every person should have a term insurance policy. Look at insurance as an expense, wherein you're buying protection for your family. Under a term plan, you get protection by paying an amount periodically. In case something happens to you, your family will be able to get financial security because of your term plan, for which you pay a small premium periodically. However, understand that you don’t get any return from a term plan. It is purely insurance, and not investment.

Coming to your second question, if you're investing in mutual funds for the first time, then you should begin with well-performing balanced funds. You can pick one or two from HDFC Balanced, UTI Balanced or DSP BlackRock Balanced. Invest in them via the SIP route and continue investing through all market conditions.

This article was originally published on June 04, 2012.