Why do people buy lic policy?

Why do people buy lic policy?
Lic policy


Friends personally speaking I hate lic policies, I have no qualms in admitting that I would have been richer by a couple of millions today, if I wouldn't have put my money in lic in my earlier years. It took me 8 years to understand that I'm going wrong. Thank God I got rid of all my policies ( I had 6 endowment policies )

Friends today every Tom, dick and harry knows that there is a thing called mutual fund which is an investment vehicle and which gives far far better returns than lic policy, then too there is no dearth in the number of people who still look for lic policy as their investment.

Why do you think this happens?

Friends today I'm gonna list you few reasons why people buy lic policy?


1. Lack of financial education.


Friends, its unfortunate that in our country, we don't get much of financial education in our school days, as a result even after achieving a master's degree, often we lag in our finances.

Though we have studied, how to compute compound interest in our 5th Std, we don't know how to put it in practice and practically how does it work?

That's the reason a 12th pass lic agent manages, to sell a stupid lic plan, even to a commerce post graduate.

All they show is a chart, and tell if you invest X amount every year, you will amass xxx amount after 20/25/30 years.

By this time you are impressed by the numbers, you get carried away by the lakhs that are shown in the chart, you are so excited by this time, that you are ready to sign on the dotted lines that very instance.

So guys get your maths right?

Next time a lic agent comes to you urging you to buy a policy, just ask him what would be the compound interest you will be earning?

I'm sure most of agents, also are unaware of it. All they want is to sell policy and earn handsome commission from it.

Its shocking but true, that most of the lic policies only earn you a paltry 3% to 4% interest, not any more than that.

Lic is a great wealth destroyer.

2. Confusing investment and insurance.


Friends another reason why people buy lic policy is because they think it's good that they are getting insurance and investment together if they are opting for lic.

Friends for God's sake, understand you need to keep your investments and insurance separate.

No financial blunder is more dangerous, than mixing investments and insurance.

They are plethora of investments avenues available today out there.

Ok if you are a risk averse person and don't want to try equities, go for provident fund in that way you are still earning around 4% more annually in form if interest.

And as far your life insurance is concerned, choose a good term plan.

3. Family pressure.


Family pressure is also a reason why people buy lic policy. Many a times parents themselves forced their children to buy a lic policy ( financial murder 🤣🤣 )

Earlier it was considered a norm that as soon as one started earning, he/she should get a lic policy.

However times are fast changing now, but still lic's charm has not completely lost.

4. Lic is safe.


Another reason why people buy lic policy is because the safety of capital it assures.

Finmaaster you have been bashing lic, right and left but aren't investments in lic safe? Isn't it backed by government?

I keep hearing this many times.

Yes it's safe, yes its backed by government so what? But what about the wealth it destroys in the course of the time.
Can you afford to loose lakhs over a period of time especially when inflation is already eating up your purchasing power.

What you think aren't investments in provident fund safe? Arent investments in mutual funds safe?

Every thing is backed by Gov, nobody is going to run away with your money.

And God forbid, if we were to face a situation like 1929 economic depression even lic which is considered a safe haven, will not be able to protect your money.

So friends just stay away from lic policy and lic agents they are very injurious to your financial health.







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