Insurance is not an Investment or should be looked upon as a tax saving tool

I happen to pick up "Outlook Money" Nov.30, 2006 issue which had the cover story featuring the need for an insurance and types of insurance policies.

The story highlighting the importance of an insurance policy reminded of my conversation with a professor working with IIM Indore. He contended that the

insurance policy has bee sold in India on a wrong premise with agents pushing for endowment schemes which were not only costly for the individual but also

offered limited cover.

With the incoming of private insurance companies enetring the Indian market and introducting wide alternative schemes both under the endowment and term

insurance lead, there has been some change in the perception of Indians towards the concept of insurance and its importance.

My view is that first insurance policy to be bought should be a term insurance. This offers you maximum coverage at least cost. For instance annual premium

of Rs.3000 for 10 years can fetch you a coverage of Rs. 10 lakhs during the period.