Why you should avoid guaranteed return insurance plans

What is your opinion on guaranteed return insurance plans? Are they investment-worthy? If yes, who should invest in them and how much?

The only guarantee these kinds of plans provide is that of low returns and low insurance coverage. These plans combine insurance with investment, promising a return even if you survive the term.

First of all, insurance and investment shouldn't be mixed as insurance is not an investment. Term insurance provides financial protection to the nominee if the insured dies. If you live, there's no payout. This might seem like a raw deal, but it's the essence of life insurance—it's about death, not life.

Suggested read: Four tips to choose the best term insurance plan

Term insurance is the purest, cheapest, and best form of life insurance. Stick to these for your life coverage. It's more cost-effective and provides adequate protection.

For investment purposes, consider mutual funds or other dedicated investment vehicles that offer better returns and flexibility.

Conclusion

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Also read: The insurance trap