Insurance and fixed deposits (FDs) serve different purposes. Insurance is designed to protect you from significant financial losses if something goes wrong, while FDs are meant for saving and earning interest.
For example, if you have medical insurance for Rs 20 lakh and face a medical emergency, the insurance covers up to Rs 20 lakh of your medical bills. You only pay a small premium each year, so if an emergency occurs, you’re protected from huge out-of-pocket expenses. Without insurance, you’d have to pay those bills yourself, which could be financially devastating.
On the other hand, if you keep the same amount in an FD, you’ll earn interest, but it won’t cover unexpected large expenses. Insurance isn’t always the best investment, but it’s essential for managing risk and avoiding major financial setbacks. Wealthier individuals might opt out of insurance because they have the financial means to handle emergencies, but for most people, insurance provides crucial financial protection.