The following is my
answer to a Quora question: “What common financial advice do you
disagree with?”
Personally, I do not like savings or endowment
insurance plans, and I have never sold a single one in my 15 years in finance. Their yield is low, they are illiquid, and
they penalise you when you have a financial need.
If someone has that sort of money lying around unused,
it would make more sense putting it into an investment fund or even an
investment-linked insurance plan. If he
is risk averse, there are bonds and debt instruments that are safer. Even putting it in a safe deposit might be
better. If the argument is that
endowments allow regular payments, so do a lot of financial products.
I have yet to be convinced of the unique benefits of
an endowment plan.
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