Investment Plans

Q- What are traditional investment plans? Why should I buy them?

Ans- In a traditional plan, most aspects are fixed and guaranteed. They are more like savings plan where your money is invested largely in debt funds and fixed deposits. The maturity amount is guaranteed. There might also be guaranteed additions that are specified in the policy itself. Bonus or loyalty additions are the only benefits that are non-guaranteed and may or may not form a part of the returns, depending upon the policy. Market conditions (ups and downs of the market) do not impact the returns. They can be endowment plans or money back plans. They are ideal if you wish to save for a purpose and cannot take the market linked risk.

Q- What is a money back plan?

Ans- Money back plan is a fixed duration investment cum insurance plan where you get periodic payments of the survival benefit during the term of the policy. These payments are a fixed percentage of the assured survival benefit. In case of death during the term of the policy, full sum assured is payable without any deduction of survival benefits paid earlier. Any additions if applicable are paid at the maturity date or with the sum assured.

Q- Do I have to undergo medical tests to take an investment plan?

Ans- Assessment of health risk is an important criterion to get life insurance. You may be required to undergo medical tests depending upon on the insurance company norms and sum assured. Generally for lower sum assured, medical tests may not be required. Most insurance companies require you to fill a health questionnaire to assess your health risk.

Q- What is survival benefit? / What is maturity amount?

Ans- Survival benefit is the benefit or the money you get back in case you survive the duration of your insurance. Investment linked insurance plans are based on this very premise and so act as savings plan for fixed goals. It is also called the maturity amount.