Also helps you create wealth

INSURANCE

Insurance = Cover of Risks

Wealth creation = Income from assets.

Insurance claim Investments = Wealth creation

WEALTH CREATIONAs it is said in Hindi ‘Khazana’. Wealth is

created from the assets that generate income.

People have many assets, but all do not generate income.

Some assets that do, are flats given on rent, investments, etc

How can you create wealth through insurance?

Many of you maybe wondering how is itpossible to create wealth throughinsurance, right?

Well, it is possible. You may not be able toprofit from insurance, but the sum assuredreceived on death can be used to create wealth.

Let us see how, with following example:

Story of Mr. Akil MalekMr. Akil Malek, a 36 year old social media

manager, working for one of the leading IT firms in India, has a family of his spouse Rubina, 33 years old and 1 child, Salman, 4 years old.

Akil has an insurance cover of Rs. 1 crore, now he is trying to create various corpuses to fund his future goals.

He starts investing through SIPs in 3 different funds and tends to keep it for 10 years each.

After 5 yers, due to an unfortunate event, Akil is no more. The loss is tragic, but at least the family is financially stable with the 1 crore from the insurance company.

But what about the future goals? They still need to be attended to.

His family can use that 1 crore to continue the investments.

So the desired corpus can be achieved, and goals do not have to be compromised on.

This way insurance helps in creating wealth.

The above scenario is in the case of death.

Now we shall take the same example, with Mr Akil, still being alive.

Insurance policies have various other benefits at maturity like bonuses.

Akil can use that maturity amount along with the bonuses to invest elsewhere.

Thus, creating wealth.

WEALTH CREATING INSURANCE POLICIES

Insurance Companies also provide wealth creation plans under ULIPs

Since ULIPs are linked to the market directly, the carry a lot of risk.

There is a 5 year lock in period for these kind of policies.

This is for people who are looking for something extra, apart from their insurance cover.

How can you control risks?Avoidance: Trying to avoid situations, where

there’s risk involved. Eg. Smoking, sky diving, etc.

Retention: Saving for the occurrence of such losses. The best example for this is your emergency funds.

Transfer: Passing the possibility of the risk to an insurance company, by paying a premium to them.

CONCLUSION

From all the above information, there are other ways in which insurance can be of use to us. So, you see it is not all boring and a waste of money. Insurance is a good product, that has to be a part of your financial assets, to give it a good balance.

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