Whenever you invest in a plan you always want the best returns from it for you and your family. The primary purpose of investing in a life insurance plan is to protect your family in case of any catastrophe.
But why invest in vanilla life insurance plans when you can invest in investment-oriented plans that will provide life cover as well as pay off great benefits in the future. The right investment plan with great returns can act as a financial safety net for your family in the eventuality of death, any disabilities, any critical illnesses, accidents or even retirement.
Importance Of Saving For Future
Opting for a life cover is important but it’s equally important to save for the future. You may be prepared if a catastrophe strikes, but are you prepared to fulfil your other financial goals if it doesn’t? Time doesn’t wait and you need to have a rock-solid financial strategy that will help to achieve goals like buying a home, child-related expenses, educational expenses, leisure expenses and any medical expenses that might occur in a lifetime. This is why opting for a high return-on-investment life insurance plan is vital. This will give you the dual benefit of life cover as well as savings.
While there are many types of life insurance plans out there, the ones that provide a great return on investment as well as protect your financial goals are scarce. The different types of life insurance plans are whole life insurance plans, endowment plans, money-back policies, unit linked insurance plans, child plans and retirement plans. Depending on you and your family’s needs, you can opt for a plan that suits you best.
Why Opt For An Investment Plan?
Gone are the days where your savings were limited to just saving accounts and fixed deposits. Today the finance and insurance industry has a variety of debt instruments that you can invest in.
With certain life insurance plans, you get the double advantage of a life cover as well as return on investments. While long term deposits may be a safe option, the proceeds from life insurance plans are tax-exempt. This makes it a very feasible prospect to invest in it. Also, the interest rates for bank deposits and savings accounts are extremely low as compared to insurance instruments in the market.
For instance, a unit-linked insurance plan is a market-linked plan which invests your money diversely in an open market. Depending on your risk appetite, you can choose to invest in anything from debt funds (low-risk) to equity investments (high-risk). You also have the flexibility to switch between different funds ensuring you don’t miss out on any high performing funds.
All premiums paid towards a unit-linked insurance plan are exempted from tax under Section 80C while the maturity amount is tax exempted under Section 10 (10D) of the Income Tax Act, 1961. This is a huge chunk of money that you save as compared to investing in any other traditional modes of investments. This kind of investment plan can come in handy when you need finances for retirement, a new home or any unforeseeable expenses.
What Are The Best Investment Options For Higher Returns?
Opt for investment options which give you multiple benefits in one plan. This will ensure that you have comprehensive protection plus you don’t have to opt for several plans.
For instance, if you have a child or children and want a plan that will secure their future aspirations and have a life cover, a child plan is the type of investment and life insurance plan to pick. It provides a life cover, has a waiver of premium benefit in case of death of the policyholder, tax benefits, systematic withdrawals, accrued bonus and loan facility.
A child plan ensures that your child has the financial support to fulfil all their aspirations in the future, even when you are not around. A unit-linked insurance plan will allow you to invest your money in various financial instruments in an open market, giving you a chance to earn a high rate of return. Whenever you opt for a plan that invests a part of the premium, that portion of the life insurance plan grows tax-free.
Some insurance companies also allow you to take out a loan against it to buy a house or pay for your children’s higher education. Other plans like a money-back plan and retirement plans work best if you are looking for a source of regular income when you retire. Depending on what your goals are and your age, you can pick the plan of your choice.
Don’t wait to invest in the right insurance plan. Delaying the purchase will not save you any money; in fact, premiums get higher as you age. A 25-year-old will pay drastically less premium than a 35-year-old for the same sum assured and plan. Opt for an insurance partner whose claim settlement ratio is high and the one who invests in prudent financial instruments and you are good to go!