In today’s time, it is crucial to opt for life insurance schemes for yourself and your family. It is also very important to choose the right scheme and know how to invest money, as it can be daunting to choose the right one from all the different types of investment schemes available. Although the basic purpose of life insurance policy is to offer protection, sometimes it also allows the policyholder to use it as an instrument for long-term savings and wealth creation.
Insurance Plans
Here are some of the best investment plans that are available in the market, which can be great insurance-investment policies for you and your family:
- Term Life Insurance: This is a type of life insurance that provides a death benefit to the policy beneficiary if the insured person dies during a specified time period. If the insured person lives till the end of the term, then he/she cannot make the claim and the coverage ends without any value.
- It offers higher protection and coverage at a minimum rate.
- Whole Life Insurance: As the name suggests this kind of life insurance offers coverage throughout your life, up to 100 years. Some whole life insurance plans also provide survival benefits in the form of periodic payments to the insured person. It also has a cash value aspect that increases over time, and you can withdraw cash value or take out loan whenever you want. In case of your death, the death benefit paid to your beneficiaries will be reduced.
- Life coverage for whole life
- The sum assured(hence the premium) is decided at the time of policy purchase.
- Sum assured is paid to the nominee at the time of death claim of the life assured along with bonuses if any.
- Endowment Policy: This type of policy provides both protection and savings, and is payable to the insured individual if he/she is living on the policy’s maturity date, or to a beneficiary in case of demise.
- Endowment Plans may offer bonuses periodically,
- If the insured person dies during the policy term, the nominee gets the assured sum along with the bonus or participating profits/additions for the number of years the insured survived in the policy term.
- In an endowment plan, if the insured person outlives the policy term, the insurance company offers him the maturity benefit.
- Endowment policies are a low-risk, tax-saving investment option that also offers insurance.
- Money Back Policy: Money back policies are the most expensive insurance options; they give you a certain percentage of the assured sum at periodic intervals during the policy term. If you survive beyond the policy tenure, then you’ll get the remaining amount of the corpus along with the bonus at the end of the tenure. In case of demise, before the tenure is completed, the beneficiaries receive the entire sum assured, no matter how many installments were paid.
- Savings and Investment Plans: This type of systematic investment plans offer benefits of market-linked returns to the policyholders, and provide you lump-sum amounts for you and your family’s future expenditures. They create corpus over the long-term, and along with that offers coverage to the insured individual’s family in case of any possible future event.
- Retirement Plans: This type of plan offers you income and coverage during retirement, and assists you in building a retirement corpus. This corpus is then invested for generating regular pension or annuity, on maturity. There are two kind of retirement plans: With cover and without cover. The former gives you coverage in case of an eventuality, and in the latter, the corpus built till then is given to the nominees, but without life cover.
- Unit-Linked Insurance Plans (ULIPs): ULIPs offer a dual combination of protection coverage and investment flexibility. In ULIPs, the cash value varies in accordance with the current net asset value of the underlying investment assets. The premium that is paid, is utilized to purchase units in investment assets, as selected by the policyholder.
- Child Plans: This type of policy serves as a savings plus investment plan, designed for your child’s future financial requirements, higher education and marriage. You can begin investing in this plan right from childbirth, and it also has the provision to withdraw the savings when the child becomes an adult. Some child insurance plans also allow withdrawals at certain intervals of time. Some child plans waive off the future premiums on the death of the parent and the policy continues till maturity
Overview of Insurance Plans
- Term Plan: Pure risk cover, Cheapest
- Unit linked insurance plan (ULIP): Insurance + Investment opportunity
- Endowment Plan: Insurance + Savings
- Money Back: Periodic returns with insurance cover
- Whole Life Insurance: Life coverage assured for whole life
- Child’s Plan: For fulfilling your child’s life goals like education, marriage, etc.
- Retirement Plan: Plan your retirement and retire gracefully
