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Do I need a life insurance cover?

The real purpose behind buying a life insurance cover is to take care of the financial needs of your dependents after your death

I don't have any dependents. Should I invest in HDFC Standard Life Insurance or a lump sum in mutual funds?
- Preeti

If you do not have anybody dependent on your financially, you don't have to buy a life insurance cover. The real purpose behind buying a life insurance cover is to take care of the financial needs of your dependents after your death.

Since you do not need a life insurance cover, you should never buy an insurance product for investment. Always opt for a pure investment product. If you are investing with a long investment horizon of five years or more, choose a top-rated equity scheme. This is because equity has the potential to offer better returns than other assets over a long period.

If you are a new comer to the stock market, choose a top-rated balanced scheme and start investing every month via a Systematic Investment Plan (SIP). If you are familiar with the stock market, you can invest in a diversified equity scheme. If you have a lump sum amount to invest, you can park the money in a bank savings account and start a monthly Systematic Investment Plan (SIP) to invest a fixed amount every month in an mutual fund scheme. You must continue with your SIP investments irrespective of the market conditions. This will help you to average your purchase cost and enhance your returns. If you are investing for short-term goals of less than five years, you should park the money in bank deposits and debt mutual funds.

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