About Saving Investment Plans

Investment Plans : Looking for tax saving plans to meet your long term and short term financial goals? Understand various investment instruments and choose the best plan at PolicyBazaar

Compare the Best Investment Plans

Best Investment Plans in India

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 education?

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 one of the best long-term investment plans. 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 expenses.

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
  • Best is to start with 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 and invest in the best investment plan
  • 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

Avoid

  • 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.

Best Tax Saving Investment

Best 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 one of the best investment options 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 ETF.
  • 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.

FAQ's

Can I pay monthly SIP on insurance?

Ans:

Yes, you can pay monthly SIP on insurance.

 

What are the modes through which I can buy policy?

Ans:

There are various channels through which you can buy policy, like online, offline, agent and bank.

What is rider?

Ans:

A rider provides extra protection to the policyholder beyond the provisions contained in the basic insurance policy. Riders offer low cost pure risk to a policyholder. However, these need to be purchased specifically along with base policy at the time of buying the policy. One is required to pay extra premiums to get riders. The right type of rider can customize your insurance plan as per your divergent needs. Some of the investment specific riders available in market are:

  • Accidental Death and Disability Rider
  • Waiver of Premium Rider
  • Critical Illness Rider
  • Temporary or permanent impairment Rider
  • Waiver of Premium on Critical Illness
  • Income benefit rider
  • Hospital Cash
  • Family Income Benefit

Am I eligible to get cash back on insurance?

Ans:

Cash back on insurance is completely illegal and against the policy of IRDA. Although, some agents make fake promises to lure customers but you should never buy any insurance plan which claims to give cash back.

How safe is my investment as per market fluctuations?

Ans:

It is tough to predict what's going to be the most advantageous asset at a given point of time. So, you should carefully diversify your investments across different asset classes which will allow you to benefit from each year's best performing asset. Moreover before investing, check the company’s portfolio and performance of your investment plans in last few years.

Last but not the least; reach out to your financial advisor to understand prevailing market trends.

Can insurance documents be used as an identity proof?

Ans:

Yes, insurance documents can be used as an identity proof. However, only LIC documents can be used as an identity proof. In rural areas, many people do not carry identity document and LIC is the only document which they are possessing. In such case, it can be used as an identity proof.

Can I take loan against insurance? If yes, what is the procedure?

Ans:

Yes, you can apply for a loan against traditional or endowment insurance policy. ULIP is not eligible for loan. The insurance policy that you bought to fortify your financial security can also be used in a cash crunch too.

Let’s know the procedure of availing loan against insurance policy

  1. Submit a loan application= A policyholder has to submit a loan application in the format prescribed by the insurance company. The complete details of the policy, policyholder and loan applied for, have to be given in the form.
  2. Assignment of insurance policy= The policy against which a loan is taken will be assigned to the insurance company as a security till the loan repayment.
  3. Loan repayment= A policyholder needs to repay the loan amount and interest during the policy term. If the interest is not paid, it will be added to the principal amount and interest is charged on the entire amount.

Important points to note

  • Loan amount is attached to the surrender value of the plan
  • Policy may be immediately terminated if the outstanding loan and unpaid interest exceeds surrender value of the policy. If such thing happens, policyholder may lose investment plan also.

What information needs to be disclosed for buying investment plan?

Ans:

Apart from disclosing your name, occupation, annual income and age at the time of applying for the investment plan, you should also mention that whether you are a smoker/tobacco user or not. Some insurance companies may also be interested in knowing your travel habits, lifestyle habits and medical details before policy issuance.

What tax benefits are available on investment plans?

Ans:

All premiums paid on investment plan qualify for tax exemptions under Section 80C . Further, maturity proceeds or withdrawals are eligible to get exemptions under Section 10(10D).

What are the exclusions in a death cover?

Ans:

Suicidal death in 1st year of policy issuance is the main exclusion of the policy.

Can NRIs buy policy?

Ans:

Yes, an NRI can also buy an investment policy in India. Over the past few years, there has been a spurt in NRI investment owing to the government's liberal policy. Those who want to buy good investment plans in India should content competent financial advisors of PolicyBazaar for managing and helping it to grow & flourish. To know about available NRI investment plans, Please Click

Can I change my nominee?

Ans:

Yes, you can change the nominee at any point of time. Just inform your insurance company about the changes either via mail or phone. You would need to fill a nomination change form by citing details like name of nominee, relationship with the policyholder, nominee's date of birth, etc. In case your policy nominee is a minor, you would also need to fill the appointee details in the form.

Whom should I contact to make changes in the policy?

Ans:

Call the customer support staff of the insurance company to amend the policy wordings. An endorsement is issued to make changes like name spellings, add things, etc. Endorsement cannot be issued to make change in structure eligibility.

How much should I invest?

Ans:

It would depend on various factors like when you start making an investment, when you decide to retire, etc. You would be able to enjoy good returns on your investment if you understand your current financial state, i.e., personal circumstances, income, fund liquidity, which you may require at the time of maturity of the policy, etc. Before zeroing in on the policy, it is crucial to understand your investment objective because then only you will be able to decide the amount to be invested.

How to revive the policy after it has lapsed?

Ans:

Most traditional plans like endowment, whole-life plans can be revived, subject to conditions that your insurer might impose upon you. Here are 3 ways to revive a lapsed policy-

  • Grace Period- The first attempt which you can make in the direction of reviving your lapsed policy is during the grace period. It is usually 15 days period after the premium due date in case of monthly payment plan and 30 days in case of half yearly, quarterly and yearly payment plans. When your policy enters into grace period, all benefits, including riders, remain intact. However, once the period is over, your policy gets lapsed. So you must pay premium within grace period to keep your benefits intact and to avoid your policy from getting lapsed.
  • Re-instatement Period- If you have missed grace period, your policy might enter into the reinstatement period. The benefits which you have accrued on your insurance policy are not valid in this tenure, but insurance companies give you a chance to revive your policy during this term. It means you will require clearing all premium dues with interest in order to revive your lapsed policy.
  • Paid up premiums- Your policy will not get lapsed if you have continuously paid premiums for more than 3 years. Even if you are not applying for reinstatement of the policy, your policy would stay intact, however, its value would fall. All benefits that have been accrued on the policy are paid on the pro rata basis, depending on the number of years continued for.

It is strongly advised that you should revive your policy within 6 months of its lapse as the process is quite easy. As the time passes, process becomes tough and you may also need to pay overdue premiums along with interest and additional documents, which could include medical tests also.

What is tax saving fixed deposit?

Ans:

It is a special category of fixed deposits where investors get tax benefits when they invest money in fixed deposits. The maximum benefit is available up to an investment of Rs 1 lakh and there is a lock-in period of 5 years.

What are tax-saving infrastructure bonds?

Ans:

These bonds are issued by Industrial Finance Corporation of India (IFCI), Infrastructure Development Finance Corporation (IDFC) and any non-banking financial company. Investments in infrastructure bonds are advised from tax saving perspective as you get an additional exemption of Rs 20,000.

Why should I buy online from PolicyBazaar? What are the benefits?

Ans:

Buying insurance online is fast, cheap and easy as compared to other modes of purchase. At PolicyBazaar, you can buy an insurance policy from any part of the world at any point of time.

Have a quick glance over benefits of buying insurance online from PolicyBazaar –

  • Cheaper policy= When you buy an investment plan online, the insurance company saves a lot of money which is otherwise spent on distributors, manual sales process, operating costs etc. This, in turn is advantageous to you as the online products are offered at low rates by the company. It means, you can save money by buying policy online from PolicyBazaar. Also there are various plans which can be bought only online.
  • Compare and get the best deal- You are buying an investment plan to fortify your financial security. So it becomes important to compare all available options. PolicyBazaar gives you a chance to compare available investment plans on the basis of various parameters so that you always choose the best which suits you most.

Also, agents are specific to limited insurers and therefore, they push only those policies to people which generate high commission for them. It is not the case with PolicyBazaar. Therefore, when you search policies on PolicyBazaar, you get a chance to pick a most favorable plan out of the available options.

  • Automated servicing= It is important to note that the online platform is not only limited to sales. It is a fast servicing channel which can be used by existing policyholders also. Irrespective of the fact that whether you have bought policy online or offline, you can use our viable platform to download brochure wordings, renew old policies, pay premiums and track the status of your insurance policy. In the internet world, entire process is hassle free and you can easily complete the transaction without any help. Our after sale services include constant reminders to customers regarding premium, complete assistance in claim settlement.
  • Online assistance= Our 24x7 customer support is open to answer all your queries. Also, our customer support number allows you to communicate via offline route. You can reach out to us via whatsapp also.
  • Mobile App= Now you can compare and buy policy on the go. You can share policies, documents and get premium reminders & other information anytime and anywhere.

What are the various options of tax saving instruments?

Ans:

Some of the popular tax saving instruments are-

  • Public Provident Fund (PPF)
  • ELSS Funds/Tax Saving Mutual Funds
  • ULIPs
  • Employee Provident Fund
  • Senior Citizen Saving Scheme
  • New Pension Scheme
  • NSCs and bank Fds
  • Life insurance policies
  • Pension plans
  • Child Plans

What is tax saving instrument plan?

Ans:

Those instrument plans which entitle a person to get tax benefits under Section 80C of the Income Tax Act are called tax saving instrument plans.

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