Investment Decisions Case 1 – Insurance Premium
A few weeks ago Rahul, a friend of mine, called up an insurance company to buy a term plan. He wanted a cover of Rs. 3 crores for 40 years.
The agent heard him and said that for a cover of this amount Rahul would have to pay Rs. 36,068 every year as premium.
The agent then told him that he wanted to make another suggestion.
“Yes, tell me.” Rahul was keen to know.
“Sir, I will give you an option where you pay premium for only 10 years but you will get a cover for full 40 years.”
Rahul was excited. This seemed like a bargain.