Investment Plans

Plans allow systematic enhancement of wealth with insurance

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Investment Plans Savings and Protection Plans

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Investment insurance plans are often called savings plans as they help save for a particular purpose or the unforeseeable expenditures in future. These plans provide life cover for a specific duration of time just like Term insurance plans but with survival benefits attached. That is if you survive the duration of the policy, you get Maturity amount along with any guaranteed and non guaranteed additions. The maturity amount is fixed by the insurance company based on various parameters like age Premium and term of insurance. Dependents receive the sum Assured in case of death of Insured during the Policy term.

While selecting an insurance plan, there are few things one needs to keep in mind:

  1. Investment insurance plans are long term products. You can choose a maturity date based on various options available in the plan such that you are able to meet your financial goal. Anticipate the time around which you will need money
  2. All investment plans are not the same. Features of each plan vary. Some offer Riders some don’t, some have the loan facility and some may allow partial withdrawal. There may also be some variation in premium paying duration. Identify the features important to you.
  3. There are aspects like guaranteed additions and Bonus that is added to the Survival Benefit and is paid at the time of the policy maturity. While guaranteed additions are fixed and declared at the time of taking the policy, bonus is the non guaranteed part and is declared by the insurance company from time to time based on the company performance.

Based on the manner in which the maturity benefit is paid to the insured, the traditional investment insurance plans can further be of two types namely Endowment Plan and money back plan.

Endowment Plans

In endowment plans the maturity amount or the survival benefit is paid in lump sum at the end of the policy term. This helps build a good corpus through disciplined investments. The maturity amount and the time can be decided based on your long term goals or anticipated needs like a child’s marriage or retirement corpus or buying a dream house.

Money Back Plans

In money back plan the survival benefit is paid periodically at regular intervals as mentioned in the policy. For example, one may start receiving partial payment of the survival benefit every five years after first ten years of regular premium payments. Money back plans are considered very good for life stage planning like child’s education, vacation planning etc. A major benefit of money back plan is that if you don’t survive the policy term the survival benefits paid till date will not be deducted from the Sum Assured paid to your dependents.

Thus traditional investment plans are considered secure savings plan with the added benefit of life cover. With assured returns one can plan for important events anticipated at different stages in life.

ULIPs or unit linked investment plans are also investment plans but in this case, unlike the traditional plans the investment Risk lies with the insured and returns vary as per the market conditions and performance of funds chosen by you.

Investment plans add value to life insurance by allowing you to think about future plans during the life time.