In this day and age, Insurance and Investment have become an inseparable part of modern society. While it is considered a smart move to save some of what you earn today and save for the future, many also make the mistake of thinking that insurance and investing are the same thing.
In fact, many of us think that one person’s investment or insurance plan will suit another. In fact, the needs and abilities of each person or family are different. Everyone must adjust their financial planning according to their needs and abilities.
Therefore, Let’s look at some of the differences between insurance and investment:
What is the Difference Between Insurance and Investment?
Insurance is a contract between an insurer (who provides coverage) and an insured (who pays for insurance). Insurance aims to protect a person or family from various forms of financial loss that can occur at any time, either in the form of loss of life, property damage or health problems. In insurance, you can get sum assured within the scope of the agreement between you (the insured) and the insurance company (the insurance company). For health insurance, you can benefit from medical protection/reimbursement (hospitalization).
Investments are assets owned by individuals, businesses, or governments. It can be in the form of cash, stocks, bonds, real estate or other physical assets. The investment aims to get back all the money or assets given to third parties, along with the profits at an agreed time in the future. Investments provide returns on property or money invested and investment returns are based on the conditions that affect the investment, for example: When investing in foreign currency, gold or stocks, the value of money or assets will be affected by the price of the investment.
Can Buying an “INVESTMENT” Insurance Policy Be Profitable?
Talking about insurance and investment at the same time has a big risk. You have to set aside one goal which could be getting insurance or investing.
It is important to remember that by purchasing an insurance policy at the same time as your investment, there will be more expenses. When you invest in an earlier investment-based insurance policy, it may mean higher premiums. Investment cannot be maximized because the fund management is carried out by the investment manager. If you ask whether insurance investment is profitable, it really depends on how you look at it.
If you’re looking for the best insurance, consider looking at the insurance & investment schemes on offer. One solution to increase return on investment is to separate it from insurance products, and vice versa. This will help you make more profit and avoid investing too much in one area. If you want to find the best value and protection, you can use a pure insurance policy or term insurance.
Buying insurance cannot increase or multiply your money/assets, this is because insurance is different from investment. Insurance only provides protection or anticipation of risks that may arise unexpectedly.