Expense Account, Mint
Why has cost become so central to the insurance product? Nobody talked about costs for decades when we all bought endowment and money-back plans. Those of us who are old enough to have these in our portfolio remember how they were sold—the promise was of a certain sum that would come back, either periodically, or at the end of 10 to 15 to 20 years. That Rs20,000 a year would finally come back as Rs3.8 lakh after 15 years. If this meant a rate of return of just 3.5%, we were happy to buy into the product for the comfort of having the neighbour uncle push us into investing, the compounding and of course, the tax break. Nobody thought of cost because in a guaranteed return product, cost does not matter to the investor since he is looking at what he puts in and what he gets back. And if the return was just 3.5%, and he was fine with it, he invested.