Plan Your Investments With Life Insurance

23 Apr, 2017 | 2 comments

Life Insurance Investments
Life insurance as a tool of financial protection plays a pivotal role in strategising the economic battlefield. In today’s economy, the life insurance products are no more a product merely to protect financial losses but go a step ahead in

wealth building mode too. Financial ups and downs and the changing needs and demands have motivated people to nurture insurance products in a diversified and multi-dimensional way. Let’s find out the things in it.

Know your life insurance variants

The Companies are blending various elements of insurance and investments to give better protection at affordable costs and at the same time appreciating the wealth value. Primarily, insurance products are divided into four types:
1) Endowment Plans
2) Money Back Plans
3) Unit Linked Insurance Plans

4) Pension Plans
5) Term Insurance Plans

But the Companies of these days are intelligent enough to woo their customers with various products comprising plans from the category either singly or in composition with two or more of the above.

Understand the variants

Before buying an insurance policy it’s very important to understand the features and utility of the plans. Insurance policies cover life risk at any point of time during the tenure of the policy, so we will not be discussing that aspect here, but will cover the investment part. Let’s understand things in a nut-shell.

1) Starting with Endowment Plans; it is a plan under which the policy-holder pays regular or one-time premium installments throughout a specific term and on maturity receives the sum assured along with accumulated bonus.

2) Money Back Plans are those plans where the policyholder pays premium either in regular instalments or at a time and receives a part of the sum assured on regular intervals. At the time of maturity, the remaining portion of the sum assured along with the bonus is returned back to the policy holder.

3) The third variant, i.e., Unit Linked Insurance Plans (ULIP)are made for those people who are a bit ambitious about their high returns on investment, at the same time worried about the financial protection. These plans are blending of insurance and volatile securities investments managed by experts. They yield high returns but come with a baggage of risk factor related with the highly unsecured securities market.

4) On the other hand pension plans are made for them who feel that they need a regular inflow of money when they are retired or are incapable of earning their livelihood after a certain period of time. In these type of policies premium is paid to buy annuities and later on, the income generated from such investments is distributed among the policyholders as pension, simultaneously covering the life risk. At the time of the death of the policyholder, the insured amount is paid the nominee.

5) All these above are insurance cum investment plans. Term Insurance Plans are pure insurance plan where somebody pays premium regularly for a specific period and insure one’s life for a specified term within which if any mischief happens to the policy holder the nominee will get the sum assured. There is no maturity return under this type of plan.

What to choose?

Well, it’s a matter of need and the capacity that works as a resistance for choosing the right one from a plethora of insurance products clustering us. Children’s education, marriage, family protection, growth, pension and many other things works as the guiding factor while choosing a plan.

While selecting an insurance plan one should prefer long term plans rather than short-term plans. Because insurance products generally take a considerable time to generate fair returns. Moreover, as a protection tool also one should cover up a greater pie of the life rather than a short-term.

One reality check

The most important and cruel fact in the insurance sector is- there are a huge amount of lapsation of insurance policies in the midway. As a result of which policyholders investment go wasted and the prime motto of protection/insurance is defeated. Annually lots of person and their families suffer because of their financial callousness and indiscipline.

So, while going for a particular product one have to know about the pros and cons of the product and let the insurance advisor understand the requirement of the proposed policyholder and the future planning behind it. A person should bear in mind his/her financial constraints and maintenance of the policy for a long period of time. Finally, a right insurance product always reaps the best fruits. Happy investing.

Life insurance as a tool of financial protection plays a pivotal role in strategising the economic battlefield. In today’s economy, the life insurance products are no more a product merely to protect financial losses but go a step ahead in wealth building mode too. Financial ups and downs and the changing needs and demands have motivated people to nurture insurance products in a diversified and multi-dimensional way. Let’s find out the things in it.

Know your life insurance variants

The Companies are blending various elements of insurance and investments to give better protection at affordable costs and at the same time appreciating the wealth value. Primarily, insurance products are divided into four types:
1) Endowment Plans
2) Money Back Plans
3) Unit Linked Insurance Plans
4) Pension Plans
5) Term Insurance Plans

But the Companies of these days are intelligent enough to woo their customers with various products comprising plans from the category either singly or in composition with two or more of the above.

Understand the variants

Before buying an insurance policy it’s very important to understand the features and utility of the plans. Insurance policies cover life risk at any point of time during the tenure of the policy, so we will not be discussing that aspect here, but will cover the investment part. Let’s understand things in a nut-shell.

1) Starting with Endowment Plans; it is a plan under which the policy-holder pays regular or one-time premium installments throughout a specific term and on maturity receives the sum assured along with accumulated bonus.

2) Money Back Plans are those plans where the policyholder pays the premium either in regular installments or at a time and receives a part of the sum assured on regular intervals. At the time of maturity, the remaining portion of the sum assured along with the bonus is returned back to the policy holder.

3) The third variant, i.e., Unit Linked Insurance Plans (ULIP)are made for those people who are a bit ambitious about their high returns on investment, at the same time worried about the financial protection. These plans are blending of insurance and volatile securities investments managed by experts. They yield high returns but come with a baggage of risk factor related with the highly unsecured securities market.
4) On the other hand, pension plans are made for them who feel that they need a regular inflow of money when they are retired or are incapable of earning their livelihood after a certain period of time. In these type of policies premium is paid to buy annuities and later on, the income generated from such investments is distributed among the policyholders as pension, simultaneously covering the life risk. At the time of the death of the policyholder, the insured amount is paid the nominee.

5) All these above are insurance cum investment plans. Term Insurance Plans are pure insurance plan where somebody pays premium regularly for a specific period and insure one’s life for a specified term within which if any mischief happens to the policy holder the nominee will get the sum assured. There is no maturity return under this type of plan.

What to choose?

Well, it’s a matter of need and the capacity that works as a resistance for choosing the right one from a plethora of insurance products clustering us. Children’s education, marriage, family protection, growth, pension and many other things work as the guiding factor while choosing a plan.

While selecting an insurance plan one should prefer long term plans rather than short-term plans. Because insurance products generally take a considerable time to generate fair returns. Moreover, as a protection tool also one should cover up a greater pie of the life rather than a short-term.

One reality check

The most important and cruel fact in the insurance sector is- there are a huge amount of lapsation of insurance policies in the midway. As a result of which policyholders investment go wasted and the prime motto of protection/insurance is defeated. Annually lots of person and their families suffer because of their financial callousness and indiscipline.

So, while going for a particular product one have to know about the pros and cons of the product and let the insurance advisor understand the requirement of the proposed policyholder and the future planning behind it. A person should bear in mind his/her financial constraints and maintenance of the policy for a long period of time. Finally, a right insurance product always reaps the best fruits. Happy investing.