Investment Plans

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Compare Investment Plans & Know How Premium Is Calculated While Buying an Investment Plan

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Compare Investment Plans & Know How Premium Is Calculated While Buying an Investment PlanA would-be investment insurance buyer is likely to compare investment plans to know more about the features of each and to find out which plan is going to offer the best returns over time. Investment plans are different from a usual life insurance plan in that while life insurance payouts are payable at the time of the insured person passing away in an untimely manner, investment plans have fixed (or unit linked) payouts during the pendency of the policy or at maturity. Since investment plans are designed to offer payouts at specific times in the policyholder's life – when lump sum cash amounts are most likely to be required – it is necessary to know about the best online investment plans, how their premium is calculated and how payouts are made.

One would typically need significant amounts of money when their child passes out of Class XII and starts college, a professional degree or other higher education course. One may need money for events such as a child’s marriage, remodeling the home and so on. Upon retirement, when one’s income will reduce significantly or cease altogether, a couple would need a source of income to help lead a dignified life and a comfortable lifestyle. Investment insurance also helps you save tax now. So clearly it becomes important to compare investment plans and choose the most suitable one. A buyer should ideally determine when they are likely to need payouts from their investment plan, compare online investment plans as well as take the opinion of other well informed policyholders to make a decision.

How an investment plan premium is calculated

When you compare investment plans with other types of insurance, some significant differences will become evident: Whereas regular life insurance premiums are low because these insurance plans offer only death-benefits; investment plans have higher premiums payable because they also function as instruments of investment. Term insurance is simple and the premiums may be ten times lower than payout policies. Not only do these policies offer no investment benefits; non-payment of premiums will mean that the policy ends without any cash benefit. This is not necessarily the case with investment policies because they tend to be more flexible. Term plans do not have surrender values and do not permit any loans to be taken against the policyholder’s accumulated corpus.

When you compare the best online investment plans you will find that there are two types of investment plans: those that have a fixed payout and those that are unit linked (ULIPs). Compare investment plans to find that fixed payout policies assure fixed but moderate returns whereas ULIP returns tend to fluctuate between high and low returns (based on market factors). The premiums payable will also differ. There is a wide range of premium payment options: onetime premium payment, yearly premium and other periodic payments. When you compare online investment plans you will also find that premiums vary based on whether one has opted for lump-sum payout or staggered payout.

Several factors determine how much insurance premium a policy holder pays for their investment plan. Generally speaking, the younger one is, the lower is the perceived risk and the longer is the premium paying duration as calculated by insurance companies. Since younger policyholders will live longer and pay more premiums, the actual amount of premiums is lower.

How to compare investment plans and premiums payable

Several insurance companies offer financial tools and calculators that help determine the amount of premium payable. To determine the approximate amount of premium that one will end up paying, one would typically look these tools offered by some of the most reputed companies such as HDFC Life, ICICI Prudential, Aegon Life, Edelweiss Tokio and so on.

For instance, if you use the HDFC Human Life Value Calculator, some of the parameters required for calculation of premiums would be as follows:

  • Personal details such as person's age and the age at which they envisage retiring
  • One’s monthly income at the current stage as well as the average monthly expenses incurred, such as living expenses, expenditure on dependents, loan payments and so on
  • One's marital status (married or unmarried) is also a key factor to take into account when you compare online investment plans and premiums payable. Obviously, the spouses’ age, earnings (if any) and spending as well as age of retirement are as important to take into account
  • The estimated amount that will be required for a child's higher education costs and the possible amount that may be spent on a child’s marriage at some point would also have to be estimated in order to compare investment plans
  • You would also need to enter details about the total value of one's savings, the amount of outstanding loans if any and existing insurance cover if any.

Based on the information that you provide, the insurance company will suggest a number that would suffice in terms of the insurance cover that you should ideally have, the sum assured and the policy term that would suffice for this. Based on your personal and financial circumstances you can now decide whether you want to buy a policy based on a onetime payment, annual payments for predetermined number of years or other fixed or flexible payment schedule.

A similar life value calculator from ICICI Prudential; or the Aegon Life iInvest Insurance Online calculator will also help you compare investment plans and premiums payable to help you make an informed choice. Similarly, Max Life Insurance also has a range of calculators available; including the life insurance planner, the premium calculator, the health planner the wealth planner, mortality risk planner and even a height predictor for your child based on their current height.

If you're unsure about filling out such forms online and would rather have specific answers to your questions, you can also visit an insurance website and request a call back from their sales representative. Several insurance providers also have an instant online chat facility – for instance you can visit the Edelweiss Tokio website to start a chat with a customer care representative right away.

All of these tools will help you compare investment plans and narrow down your choices to find the best online investment plans for your needs. You no longer have to depend upon the suggestions of brokers; you can now take your own informed financial decisions independently.