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Well, it depends on your objective, as there are several structured product available, albeit for a fee. If you are not too busy or lazy, my personal take is keep insurance separate from investment.

Insurance is selling (transferring) your risk to a counter party (insurance company) for a fee whereas investment is buying risk (there’s risk in every investment) for a return. Insurance companies mix these two and sell structured products like Unit Linked Insurance Plan (ULP), endowment plan, Anticipate Endowment Plans/ Money Back Policy etc.

The moral of the story is that you should take pure risk cover i.e. term insurance. In case of life insurance, the amount of risk cover depends on parameters like your age, annual income, dependents, and health. Rules of thumb are

1. Get an insurance cover as early in your life as possible as premiums increase with age and are fixed for the tenure of insurance.

2. Cover should ideally be around 10 times your annual income esp. if you are the sole bread winner in the family.

3. Avoid riders if you plan to take medical insurance separately.

4. Do not take out a policy to get tax breaks. Tax saving is not the objective here; consider it a bonus.

5. Divulge all the details honestly as there is a clause in every agreement that your nominee will not be eligible for claim if the cause of mishap is related to a material misrepresentation in your policy.

6. Try to stick to established Indian players like LIC, Tata etc; although lowest premiums are offered by Max and Metlife.

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