UTILITY AND RISK RETURN PROFILE OF BASIC PRODUCTS

PURE INSURANCE:

Pure Insurance is purely meant to cover the various risks we face in our day to day life. We all face the risk of untimely death, diagnosis of critical disease and sudden disability due to accident or chronic diseases. At risk are our family’s income in the event of breadwinner’s untimely death and our years of savings that can be drained out suddenly in the event of hospitalization or in treatment of chronic diseases etc.

Pure insurance helps us in coverage of these risks at low cost in order to protect our family’s income in the event of bread winner’s sudden demise and economic assistance in the event of hospitalization etc. Insurance is not an investment product.

PURE DEBT (SAFE INVESTMENTS)

All savings and investments products where returns are fixed for a fixed tenure are pure debt instruments. These are considered safe investments. Highest the safety, lowest the returns is a fundamental rule of investment world. These are not considered suitable to earn inflation beating returns in longer term. Post Office savings products like PPF, NSC, Time deposit and Bank FDs & Government of India Bonds fall under this category.

PURE EQUITY (RISKY INSTRUMENTS)

Stock market related investment options that carry high risk with potential of earning higher returns are called pure equity. Shares and stocks and mutual funds Equity schemes fall under this category. These are long term investment options. Risk in these investments reduces as the time horizon increases. These are considered to be earning inflation beating returns in long term. Since there is no guarantee, hence demands highly skilled management.