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Should one consider non-participating insurance schemes for regular income?

Dhirendra Kumar talks about why non-linked insurance products don't make sense and factors one should consider for deciding asset allocation when nearing retirement

Should one consider non-participating insurance schemes for regular income?

Amid uncertainties, should investors in the age group of 45-60 reassess their asset allocation? Also, should they be considering non-participating non-linked saving schemes sold by insurance companies for regular income?
- Payal Choksi

45-60 years is a broad range, and it depends on how far or close you are to your retirement. If you are close to your retirement, you should generally tilt towards fixed income to meet your income requirements. However, it also depends on several other factors, such as your circumstances. If you rely on your investments for income, you need to prepare differently and be more tilted towards fixed income. On the contrary, if you are not going to depend on your investments for income, you can be more liberal and add more equity to your portfolio because you don't have to worry about the worth of it all the time. Thus, evaluate your situation and your needs more objectively and plan things accordingly.

Whether you should be looking at non-linked savings schemes sold by insurance companies, the answer is no. These products combine insurance and investment, which is not a great idea. For any thoughtful investor, one should invest in a low-cost debt fund and a low-cost equity fund and rebalance it. You will have a superior outcome resulting from it. Unless you are terrified and just want a guaranteed income from any of those plans, don't go with such products as any guarantee comes with a cost, and it will lower your return. So my suggestion is, plan your allocation depending on your situation and avoid any insurance-linked investments.

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