I was talking to some of my friends in the recent trip of mine where we talked about life, our investments, our insurance and what not. When the topic came to insurance, one of my friend jumped and said that Insurance is a scam and if we would have saved that money we would have got much more money.
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I somewhat agree with him because the insurance which we have been sold is not really a insurance it is a Ulip plan which is basically a scam. The ULIP or Unit Linked Insurance Plan is a plan where you will pay some amount every month or year and you will get the insurance cover as well as you will get the money back after the term. The problem with this is that the cover would be less and the returns which we get is quite low too.
Now people who doesn't know anything about the insurance or personal finance, they fell prey to this and thus they think it all as a scam. If you go for a pure insurance the premium is quite low and if the extra money will be put in the market, which will be grown much more than the money you will get after this ULIP plan.
People who are not aware of this usually fell for this and thus their hard earned money doesn't reach the potential they should have been. I too have been sold one of the policy, since the premium was quite low and it was just for 10 years, I have learned it the hard way.
But there are people who have been paying quite a lot thinking they will be getting a huge sum after the maturity but that is not a Cas and after that they feel that these all are just a scam. This is the exact thing happened with my friend too. When we have told him about these things, he got relived and now he is rectifying the mistakes he has made over the years.
Insurance is very complicated (I don't understand it) and some aspects of insurance are VERY scammy. Insurance can be a valuable tool though. I worry about insurance companies controlling our behavior. For example, some insurance companies were telling people they had to get the Woke Poke to stay insured. That's methed up.
Insurance is just to buy "assurance" rhay if something happens in between (accidents/ illness/death) then those that are left behind (family/debt) can be (kind of) settled.
If you are generally in clean bill of health till and ripe old age, its a rip off because the returns are super low.
However, there are plenty of scammers out there in terms of investments too, they even disguise as jobs and offers to "train" you along the way.