Investment plans help beat inflation and build a large corpus. We at Policybazaar.com
help you compare investment plans offered by all life insurance companies in India
and select the best suited investment plan for you. An investment plan should be
selected keeping in mind 3 main goals:
- Risk Profile-if you are a young customer and are willing to take
financial risks, a ULIP is better suited for you while if you’re a conservative
investor, then a traditional endowment or money-back plan will suite your needs.
- Investment Tenure – Insurance plans offer a mid-to-long term investment
horizon. Unit Linked Insurance Plans or ULIPs are very good long term instruments.
- Final Goal – you want to build the corpus for retirement or child’s
Top Investment Product Categories in Insurance:
ULIPs or Unit Linked
Insurance Plans are the easiest way for a consumer to enter the stock market
with an added advantage of life cover. As these products provide tax benefits and
market linked returns, they are very good for long-term investment. ULIPs offer
many investment funds to choose from which allow you flexibility to shift between
equity and debt, based on the market conditions and risk profile.
Traditional Endowment plans are regular saving plans which help build a corpus and
give guaranteed maturity benefits along with bonuses. These products give you returns
equivalent to a fixed yield/deposit but also combine insurance risk cover and add-on
riders to primarily build the safety cushion in case something goes wrong.
Moneyback Plans are a type of endowment plan which give periodic cash payouts to
investors. As they help build regular large capsules of fund; they are very useful
for salaried class who wish to save for buying large assets every 3-5years.
Child Plans are saving instruments which help parents build a protected asset for
their child’s future. They also provide many insurance features which protect the
intent or reason for corpus building; primarily for child’s future education and
Key things to remember while investing in an insurance plan
- Set financial goals - both short term and long term
- Maintain balance between risk and returns; allocate amount accordingly
- Investments should be both liquid and fixed. This enables you to use them in emergencies
as well as avoiding overspending
- Start small and gradually increase invested amount. Choose premium payment options
ranging from monthly to annual to single premium
- Research a lot before investing; use help of financial planner if need be
- Review portfolio each year and make changes accordingly
- Ask questions - Resolve all your doubts before investing. Use investment calculator
to calculate exact premium before buying
- Over exposure to single market instrument
- Over-investing which could burden present finances. Many a time people invest more
than what they can comfortably put aside after meeting regular expenses resulting
in cancellations. The cumulative effect of such cancellation is losing your hard
earned money in penalties.
Tax Saving Investment
Investment plans also make for good tax savings instruments. In life insurance,
premium amount payable is deductible from taxable income up to maximum amount of
Rs 1 Lac under Sec 80C. Maturity proceeds and death benefits are also tax exempt
under Sec 10(10D).
Other Investment Options to choose from
Mutual Funds: This is a professionally managed trust in which investment
is pooled from retail investors. The accumulated amount is invested in different
financial instruments like shares, securities etc. As the income is earned on these
instruments, it is shared proportionally among investors. Mutual Fund is considered
a very good investment option due to its very low charge structure.
Investments in Gold: The value of gold has been appreciating steadily.
Looking at the last few years, there has been more than 22% annualized returns;
this makes gold a very good investment option. For people interested in investing
in gold, there are various methods which include physical gold, e-gold and gold
PPF, Bank Fixed Deposits and Postal Schemes: These 3 options are
most suitable for making safe investments. The interest rate on PPF account is presently
at 8.8% per annum and keeps changing every year; different banks offer different
interest rates. There are also many postal investment schemes which can be bought.
Unlike Insurance; other Investment products are not aimed to provide a financial
cushion to family in case of unforeseen circumstances, thus we recommend our consumers
to prefer Insurance over other financial instruments.