How does Finbingo see insurance (as a tool protecting your wealth rather than a savings product)
The biggest misapprehension going around in the financial world today is that insurance is a savings and investment option. This has largely been caused due to insurance agents pushing various policies on to customers to earn larger commissions associated with such plans. There are hundreds of variants of investment-cum-insurance products available under the insurance umbrella. People are lured into false promises of high returns combined with protection, and they mostly end up buying the policy without understanding the features, the charges and downside of such products.
However, Finbingo is not a commission-based service portal. It therefore has the ability to call a spade a spade. It is the most objective and passion-free financial services portal armed with intensive research capabilities and ability to analyse a vast amount of customer data within seconds. Due to its AI capabilities, it can analyse your financial data, match your requirements with suitable financial options and come up with the perfect action plans out of thousands of portfolio simulations. Finbingo would suggest the customer an insurance policy only if he needs one, and if it is in his best interest. There is no conflict of interest between the customer and Finbingo, and hence, it only aims at maximizing the customers wealth.
There are several reasons why Finbingo looks at insurance only as a means of protecting wealth, and not as an investment.
- Investment-cum-insurance plans do not provide adequate life cover.
Endowment plans, moneyback plans, ULIPs, etc. are all combination products that claim to provide the customer with both insurance and investment benefits. However, when it comes to the insurance part, the amount of cover provided considering the premium amount is very low compared to a term plan. In case of an actual unfortunate event, this amount is nowhere sufficient to cover the family’s financial needs for the coming years. Hence, if you are looking for insurance, go for a pure insurance policy like a term plan.
- Investment based insurance does not give commensurate returns.
Note that such insurance products are generally long-term, with 7-10 years minimum lock-ins, but the returns per year do not exceed 5-6% after considering all the charges. This is much lower than products like equity funds which can give you significant returns like 15-16% over a longer horizon.
- Combination products destroy the benefits of both instead of combining them.
It is always better to keep aside a corpus for investment, for the purpose of earning returns and maximizing wealth. Insurance needs must be gauged on the basis of various factors such as age, employment, life stage, family needs, etc. and after deciding the amount of cover required, a term plan must be chosen that can provide such cover at the lowest possible cost. This will ensure that both investment and insurance needs are fully satisfied in the most efficient possible manner, instead of going for a combo product which may not completely fulfil both the needs.
Thus, Finbingo looks at insurance only as a means for protecting your family in an emergency situation and segregates it from your other financial objectives of investment, retirement planning, earnings growth, and maximizing wealth.