What is The Difference Between Insurance And Investment?

What is Insurance?

Insurance works like a legal agreement between two parties: the insurance company and the insured individual, where the former promises to offer protection to the latter in the event of an unfortunate event like an accident, death, injury, etc. The primary purpose of an insurance plan is to reduce the effects of unpredictable and unfortunate events that might arise in the future.

How Does It Work? The insurer agrees with the insured to offer benefits (financial and other) under specific circumstances in exchange for a regular premium.

Types of Insurance Plans:

• Life Insurance
• Motor Insurance
• Health Insurance
• Home Insurance
• Rental Insurance

Did You Know that purchasing motor insurance is mandatory, under the Motor Vehicles Act 1988, to drive your vehicle legally in India?

What is Investment?

Investment is a financial move where one party commits to putting money into an asset with the hope of gaining profitable returns through the growth of the asset’s market value in the future.

How Does it Work? You invest your money/resources in an asset of your choice, and you might gain profit either in the form of cash or a return of the asset with increased value.

Types of Investment Plans

• Stock Investment
• Mutual Fund Investment
• Bonds and Funds Investment
• Real Estate Investment
• Fixed Deposit Investment.

Quick Look at the Differences between Insurance and Investment

Here’s a table highlighting the differences between insurance and investment:

Insurance Vs Investment: An Answer to Your Dilemma

Choosing between insurance and investment can be confusing, especially when both have the potential to offer financial protection in the long run. If you are also in the dilemma of insurance versus investment, then here are a few factors that can help you decide:

Know Your Financial Goals

The first step is to know your financial goals for which you want to purchase an insurance plan or invest your resources. This can include evaluating your responsibilities, future financial plans, short-term and long-term needs, and current financial stability.

Start Investing Early

Starting your investment journey at an early stage of your life is a smart decision. You can start with even a small amount and see your money grow over time. This can help you take care of your long-term needs like children’s education and marriage expenses, paying off debt, purchasing a car or house, and building a sizable corpus for retirement.

Insurance for Coverage and Peace of Mind

Purchasing insurance is something that should not be substituted. It is a safety net for you and your loved ones against the uncertainties of life. Through different types of insurance, you can secure coverage for many needs, such as:

• Life insurance ensures that the needs of your loved ones are taken care of even when you are not around.
• Health insurance ensures that your medical bills are covered.
• Motor insurance for legal compliance and financial protection.

Did You Know that India is one of fastest fastest-growing markets for insurance plans, and it is set to be the 6th largest insurance market by 2032.

Combing the Two

Usually, an ideal way is to distribute your finances between insurance and investment. While your money keeps growing through investments, any emergency needs are taken care of through an insurance plan.

Did You Know that you can combine the benefits of insurance and investment through a single plan? A unit-linked insurance plan offers dual benefits of insurance and investment. To learn more about such plans, you can head to the Jio Insurance Broking portal.

To Conclude

Insurance and investment are two integral parts of financial planning. Choosing between the two often gets confusing, especially when both have the potential to offer financial protection in the future. However, remember that substituting investment for insurance or vice versa is usually not the smart way ahead. You can plan efficiently to manage your finances between the two.

If finding the right plan appears overwhelming, you can rely on Jio Insurance Broking to help you explore, compare, and purchase an insurance plan catered to your needs.