At various life stages, one need funds. An individual need to build the corpus. Whether the need is for child's education, marriage or retirement savings. When one starts looking up for various ways to build funds, one tends to look investment plans where your money grows while you sit back. Because of the number of investment avenues, there is no simple solution to it. However, the simplicity of investment plans offered by the most life insurance companies is one of finest options available.
What is an Investment Plan?
Investment plan is the simplest ways to build wealth over the time. Life insurance companies offer various investment plan options. These are the wealth creation products for the future when you will require it. It requires planning and understanding of different options available.
Wealth Creation - Investment plans with life insurance are sure shot way to accumulate wealth over a period. As an investor one can choose suits the best depending on the risk, returns and disposal amount to buy a plan. In future, when you would require funds for child’s education, child’s marriage, retirement, pension, etc. life insurance investment plans will financially aid you.
Financial Protection - Life insurance policy provides life coverage with investment options, which takes care of the family financially as both Survival and Death Benefits are provided. At maturity, policyholder receives the returns with profit in the pocket. This way one can provide long-term financial security to the family. In case of an unfortunate eventuality, policyholder dies before maturity period, the insurance company will pay the nominee the sum assured. In this way, it provides financial protection to the family of the policyholder.
Death Risk Coverage - Not all investment avenues offer death risk coverage options. However, investment plans by life insurance do. These plans include death risk coverage. This way, your family’s financial needs are taken care even in your absence. The sum assured is paid to the nominee in the event of the death of the policyholder.
Retirement Savings - One can buy these investment plans at any given time of life stage. That said, this allows you create the corpus for the retirement. One can buy and build funds that can be used at the later stage of life. In this way, even after retirement the investor will financially independent.
Flexibility - Flexibility of money to be invested and the duration. One can opt as feasible, depending on the needs and planning.
Save Taxes - Investment plans are not only risk cover or wealth accumulation plans, but these plans also help in tax savings. As per section 80C and 10(10D) of Indian Tax Act, premiums and payout are exempted from tax. A perfect combination of savings, wealth creation, financial protection with tax benefits.
Loan Facilitator - Life insurance investment plans also act as a loan facilitator. But, it depends on the coverage one has taken, premiums paid, eligibility for the loan amount, etc.
Purchasing an investment plan for your child is of utmost importance in todays’ day and age. This rising cost of education can add to the financial stress for the parents. To counter this, it advisable to purchase a child insurance plan. In addition, a child plan also reduces the financial stress on the parents during the time of admission.
Mentioned below are the features you need to check before buying an investment plans:
Where are you investing: You need to know and be sure about where you are investing and how much risk is involved.
Look for complete transparency: Look for investment plans that are completely transparent.
Study past performance : The objective of investing is to gain returns. For which, you must check past performance report of the funds where your money will be invested in. This will help you to know how much returns can be expected. As per your investment funds, you can see their long-term or short-term performance report
How much are you charged: You may be charged a minimal amount as a commission to manage the portfolio. So you must check how much you are charged just to ensure you are not overcharged. And if yes, why!.
Know your fund house: How reputed or well-known is your fund house. As you put your trust in the fund house it is essential to know about their claim settlement ratio. . Plus, you are giving your hard-earned money into their hands to utilize on your behalf and to the best of their knowledge and experience, it is your responsibility to know your fund house.
1. Dependents - This is one of the most important factors to consider before investment planning. Determine the number of dependents who you intend to cover under a plan - spouse, children, parents, in-laws, etc.
2. Financial Goal - Financial goals will help you determine the amount of investment required to achieve the same. Determine if you have long or short term goals. Short term goals can be like purchasing a new car while long term goals include children’s higher education, marriage.
3. Current and Future Liabilities - This will help you determine the amount of investment which has to be dedicated towards the investment plan without compromising on your current lifestyle and standard of living.
4. Insurance Cover - Ensure that you purchase a comprehensive insurance plan which comes with a high sum assured. The high sum assured will ensure that all financial goals are taken care off with or without you.
5. Debts - Ensure that you calculate the investment amount post deduction of any loans/EMIs. It is advisable to analyze your ability to take on further debts, and invest in them only when you are sure of your ability to repay them within their due dates.
6. Alternate Income - Opt for a life cover that will financially support you and your family, in case of life-threatening unforeseen incidents and accidents (total or partial disability or even death due to an accident).
7. Additional Income - Always divide your investment sum into different policies. One part of the sum should be invested in life insurance plans while the reminder half into pure investment plans.
8. Premium Amount - The premium amount is the sum which you are required to pay towards the insurance plan. You can determine the suitable premium with the help of a premium calculator. Online premium calculators are available on the websites of investment companies to offer investors the convenience of getting free premium quotes.
1. Cover - It is advisable to compare multiple insurance investment plans across different insurers. This will help you determine the suitable premium within your budget.
2. Riders - Riders are an excellent option to enhance the cover of your existing base insurance/investment plan. Know about the features and benefits of each rider and opt for only the ones that are suitable for your unique needs.
3. Premium - Select the premium amount most suitable to your financial circumstances.
4. Increase/Decrease Premium - Opt for a plan which comes with the feature to decrease/increase your premium during the policy term. This allows you the convenience of starting with a lower cover and gradually increasing it as per your rising annual income.
5. Payout Type - There are some investment plans that offer regular payouts, others offer a one-time payment, while still others that offer a mix of both. Choose the option that best suits your purpose of investment.
6. Returns - The returns depend on the types of funds which comprise the insurance plan. Funds can be equity, debt or hybrid based. Equity mutual funds are usually a great option for investors looking for high returns within a short span of time. Hence, they are best suited for high risk takers.
7. Alternative Insurance Plans - A single investment plan may not be sufficient to meet multiple aspirations for the future and secure the financial needs of your family. Opt for a second plan which will act as a backup in case the primary plan fails to provide a settlement.
An investor of life insurance investment plan can opt riders. Ass the investment plans also combines death risk coverage, optional riders under such policy is available. Riders expand the policy coverage. In addition to the basic sum assured, rider benefits are also paid.
Accidental Death Riders: If the policyholder dies the accidental death, the insurance company will pay the sum assured plus the rider benefit to the nominee.
Accidental & Total Permanent Disability Rider: If the policyholder suffers total permanent disability due to the accident, the insurance company gives the rider benefit to the life insured.
Critical Illness Rider: On diagnosis of any major critical illnesses such as heart attack, cancer, stroke, kidney failure, paralysis, coma, the insurance company pays the rider benefit.
Waiver of Premium: In case of a vanilla term insurance, if the life insured suffers any disability because of which is unable to pay any future premiums, the policy terminates.
Accelerated Death Benefit Rider: On diagnosis with a terminal illness, such as Cancer, Leukemia. AIDS, Ebola, the insurance company pays a part of the sum assured in advance and the rest to the nominee.
| Plan Name | Entry Age | Minimum Premium |
|---|---|---|
| Bajaj Allianz Future Gain | 1 to 60 years | Rs. 25,000 |
| HDFC Life Pro-Growth Plus | 14 to 65 years | Rs. 2500 to Rs. 10,000 |
| Aegon Life iMaximise Insurance Plan | 7 to 55 years | Rs. 24,000 to Rs. 36,000 |
| PNB MetLife Smart Platinum | 7 to 70 years | Rs. 30,000 to Rs. 60,000 |
| MAX Life Fast Track Super | 91 days to 60 years | Rs. 25,000 to Rs. 1,00,000 |
| SBI Life Wealth Assure | 8 to 60 years | Rs. 50,000 |
| SBI Life – eWealth Insurance | 18 to 50 years | Rs 10,000 to No Limit |
| ICICI Pru Wealth Builder II | 0 to 69 years | Rs. 24,000 to Rs. 48,000 |
The eligibility criteria to buy an investment plan are:
Mentioned below are the documents required for buying an investment plan:
Almost all investment companies have an online presence. With so many options that promise you good returns, it becomes necessary to compare to choose the best. To invest in the best investment plan, you can compare investment plans online.
With investment comparison tool available online, you can easily compare investment plans and their features. The comparison of different investment plans will get you quotes spontaneously. You can easily compare, differentiate, and choose the best investment plan that suits your requirement. It will save you money and time.
Here are the steps to purchase an investment plan online:
1. Visit the official website of the insurer/Broker/aggregator
2. Fill in the requested information
3. Select the desired options
4. Select the suitable plan with the premium quote
5. Post selection, you need to fill the proposal form
6. Upload the requested KYC documents - Proof od ID/Address, Income Statement, Medical Report, Bank Mandate Form.
7. Post verification and premium payment, the policy will be delivered to your inbox within 24 hours.
Is investing in Unit Linked Insurance Plan (ULIP) a good idea?
Unit Linked Insurance Plans (ULIP), provide life insurance cover and an opportunity to invest and build funds. Earlier, the charges were high, but post 2010, ULIP has changed, especially, when it comes to charges which means premiums are utilized in investing. Another aspect is, lock-in period has changed from 3 years to 5 years.
ULIP offers an ample of opportunity to invest depending on the risk appetite of the investor. It gives an opportunity to invest in different products like equity, debt, bond or money market or hybrid. ULIP offers flexibility to change the premium payment terms, the sum assured and the choice of premium payment frequency. Moreover, you can enhance your plan with riders.
One thing you should keep in mind that you must invest in ULIP only with a long-term horizon, at least, keeping 10 years or more years of investment in mind.
What are the top investment plans with high returns?
The top investment plans to gain high returns are equities and large-cap mutual funds. However, it is advisable to consult your financial planner to help you in investing and balancing your investment portfolio.
What are the best short-term investment options in India?
There are many options to invest for a short term, like fixed deposits, savings accounts, equity-linked saving scheme (ELSS), recurring deposits (RD), money back plans, mutual funds, etc. If you are planning to invest for a period of 1 year then recurring deposit would be the best option. As in this plan, you pay money on a monthly basis and you also receive interest on the money invested. However, the interest is taxable. And if, you are planning to invest for more than a year, equity mutual funds and fixed maturity plans are most suitable, as these plans offer high returns and are more tax efficient when compared to other short-term investment options.
I want to secure my child’s future by investing in a best child investment plan. How do I go about it?
You can opt for different types of life insurance policies. You can opt for ULIP or Money Back plans or child plans to meet your child’s dream. Since all life insurance companies offer child plans with different variants under a plan, you can always opt for child plans to meet all your child’s educational goals.
Further Readings:
Secure a Bright Future for Your Child With a Customized Child Plan
Are there any good reasons to invest in a pension plan in my 40s?
Yes, there are plenty of good reasons to invest in retirement plans. If you haven’t planned your retirement yet, it is a good time to start now. It is always better to invest as soon as possible. If you have been doing your financial planning right so far, by now, you may be less burdened with loans and worries about your child’s education planning. It is said, “You can meet all your financial needs but retirement goals.” Because you can opt for loans or choose different financial tools to meet those goals. However, there is no facility to opt a loan for your retirement. It is essential to build a corpus on your own with the help of various financial vehicles. It depends on how you plan your retirement. However, pension plans are the safest and easiest ways to plan your retirement. Investing in pension plans in your 40s give you an ample amount of time before you retire. You would still have at least 20 years of time frame to build a corpus to enjoy your post-retirement time. Different investment plans you can look forward to your retirement planning when you are in your 40s are:
Further Readings:
How to How to Use Life Insurance in Your Retirement Planning?
Things to keep in mind before you invest your money
Below mentioned points you should keep in mind before investing:
Why should you buy an investment plan?
You should buy an investment plan because:
What are the best investment options under section 80C?
Today, the market is loaded with different investment plans, one best than the other eligible for deductions under Section 80C. Let’s have a look at some of the best investment options that would make your life a little better by savings those extra bucks on tax deductions under Section 80C:
ELSS – Equity Linked Savings Scheme : The ELSS is nothing but mutual funds that are tax saving. They invest almost 65% of your assets in the stock markets. You can save tax under Section 80C if you invest in ELSS funds up to Rs.1.5 lakh. The lock-in period here is the lowest which is 3 years compared to other investment options under Section 80C. The drawback of the ELSS is that the returns offered are not guaranteed. You may get 12-15% returns from the best performing ones only over long term. These funds offer liquidity once the lock-in period is over.
EPF – Employee Provident Fund : You as an employee can also earn a tax break up to Rs.1.5 lakh in case you invest in an employee provident fund (EPF), under Section 80C. Here, your employer deducts almost 12% of your basic salary and invests in the EPF fund or any other recognized provident fund. You can earn a good interest rate of 8.8% in case you invest in EPF funds.
NPS - National Pension System : This scheme basically is an Indian Government organized pension scheme that helps the retired troop with a regular pension. NPS offers tax savings of up to Rs.1.5 lakh under Section 80C and Section 80 CCE. You can also claim an additional deduction of up to Rs 50,000 under Section 80CCD (1B), which is in addition to Rs 1.5 lakh permitted under Section 80C.You as an investor can choose or subscribe to any plan depending up on your risk profile. The highest capping is 50%. You may also change the pension fund manager. NPS comes with a major drawback that the maturity amount is taxable. Besides, it doesn’t offer guaranteed returns.
FD – Tax Saving Fixed Deposits : The Tax-Saving FDs come with a lock-in period of 5 years. You can also earn a tax break up to Rs.1.5 lakh in case you invest in Tax Savings FDs, under Section 80C. The interest rate of the tax saving FDs however vary from one bank to another ranging from 7 to 9%. The biggest advantage of these type of FDs is that they offer guaranteed returns with 100% capital protection.
Are savings bonds a good investment?
Bonds are debt investment plans where investors can loan funds to an entity like an organization or the government. This borrowed money is invested by the government or organizations for a specific period and at a certain interest rate.
How can I grow my money fast?
The returns that you enjoy from an investment plan depend on the type of plan that you have invested in and the term invested for. If your investment objective is aimed at fast capital growth, equity mutual fund investment is a wise option. However, you need to have a high risk appetite as the funds are exposed to high market volatility to generate high returns within a short span of time.
How do I invest money wisely?
You need to keep in mind certain parameters like your investment objective, risk appetite, whether you’re looking for meeting long term or short term goals, etc. to decide on the type of investment plan you should invest in.
How can I invest my future money?
To invest your future money, have a clear idea about your financial goals, whether they are long term or short term, risk appetite, number of dependents, existing and future expenses, among other factors, to determine the type of investment plan that will be best suited for your needs and provide standing instructions for the future money to be invested in your chosen investment scheme.
How can I invest my future money?
To invest your future money, have a clear idea about your financial goals, whether they are long term or short term, risk appetite, number of dependents, existing and future expenses, among other factors, to determine the type of investment plan that will be best suited for your needs and provide standing instructions for the future money to be invested in your chosen investment scheme.
What are the best assets to own?
You can consider the following investment plans:
How can I make a small investment?
A Systematic Investment Plan (SIP) on mutual fund schemes enables you to start investing through easy monthly instalments, starting from an amount as small as Rs. 500. For life insurance policies, ULIP is a recommended option. A Unit Linked Investment Plan is an effective option for meeting long term investment objectives.
How can I open a PPF account?
You can open a PPF account only at certain designated banks like State Bank of India and its subsidiaries, Bank of India, Central Bank of India, Indian Overseas Bank, Punjab National Bank, IDBI, Axis Bank, ICICI Bank, HDFC Bank, and some others. All you need to do is visit a branch of one of these banks with the necessary documents for address and identity proof. For opening a PPF account online, you can type in the essential information to start an account.
How do beginners invest in stocks with little money?
Here’s how beginners can start investing in stocks with limited amount of money:
How do I invest my money to make money?
You can consider the following investment plans:
How do you double your money?
Here are some investment plans that help you double your investment within a stipulated period of time:
How do you make money from investing?
Funds, when contributed towards investment plans, are exposed to the capital market with the objective of achieving growth.
How many years does it take to double your money?
The number of years it will take for you to double your money is determined by the interest rate applicable on your investment plan. For instance, as per the Rule of 72, it will take you about 7 years to double your money at the rate of 10%, 8 years at the rate of 9%, and so on.
Is gold a good investment?
There are primarily two reasons why gold is a good investment. These are:
What are examples of short term investments?
Below are some examples of short term investment plans:
What are investment options?
Investment options refer to the funds contributed towards savings and investment schemes, according to an investment strategy that takes into consideration your financial goals, risk appetite, etc. It is aimed at generating capital growth through diversification of portfolio.
What are safe and good investments?
The following are some safe investment plans:
What are SIP investments?
Systematic Investment Plan, abbreviated as SIP, offers investors the convenience of paying their annual premium for their chosen investment plan through easy monthly instalments. These instalments start as small as Rs.500.
What are some high risk investments?
Some instances of high-risk investments are equities, equity mutual funds and hedge funds.
What are the 4 types of investments?
What are the lowest risk investments?
Some low risk investments are:
What can I invest in with 1 lac?
Here are some effective investment plans that you can consider for enjoying healthy returns:
What do mean by investment?
Investment refers to the amount of money contributed towards investment and savings schemes, as per an investment strategy, aiming at capital growth through diversification of portfolio.
What investments give best returns?
Some investment plans that you can consider for enjoying good returns are:
What is a good rate of return on investments?
When the invested plan that you have invested in generates high capital growth, it is referred to as good rate of return on your investment.
What is monthly income scheme?
Post Offices in India offer monthly schemes against a wide range of financial products and services, as authorized by the Ministry of Finance. As a result, it is a reliable and stable source of monthly income, with low risk exposure. Accompanied by a maturity term of 5 years, the investment amount is up to Rs. 4.5 lakhs for an individual and Rs. 9 lakhs for a joint account. This scheme is aimed at capital protection.
What is a PPF account?
Introduced in the year 1968 by the National Savings Institute, under the Finance Ministry of India, it is one of the most popular savings and investment instrument, especially for saving taxes. It requires a minimum annual investment of Rs. 500 and a maximum of Rs. 1,50,000, and attracts an annual interest rate of 7.6%, which then gets compounded. Public Provident Funds offer the flexibility of paying the investment amount in lump sum or through a maximum of 12 easy instalments in a financial year. The maturity period ranges from a minimum of 15 years and up to a maximum of 5 more years, as per the investor’s financial objective. The invested amount can be transferred from one bank to another within India and serves as security and collateral at the time of loan application from the third financial year. Investors can avail tax deductions as per Section 80C of the Income Tax Act, 1961. The accumulated interest is also entirely tax-free.
What is the best investment for monthly income?
You can consider these investment plans for availing a stable source of monthly income:
What's the best way to invest money for short term?
Effective short term investment plans that you can consider are:
Where can I invest a small amount of money?
You can start investing small through one of these investment plans:
What is the best investment option for long term?
Some effective investment plans for meeting long term investment objectives are:
Where can I invest money safely?
The following are some good investment plans:
Where should I invest my money?
The following are some good investment plans:
Which investment gives highest return?
The following investment plans are effective instruments for generating healthy returns:
Which investment is best for short term in India?
Some short term investment plans that you can invest in for meeting short term goals are:
Which investments have the best returns?
The following are some good investment plans:
Which is an example of an investment?
Examples of investment are ULIPs, mutual funds, bonds, stocks, among others – anything that the investor feels would generate returns against his/her invested amount over a long or short term. Which is best investment? The following are some good investment plans:
Which is best mutual fund to invest in India?
Here are some leading mutual fund investment plans of 2019:
Which is better option for investment?
The following are some good investment plans:
Which is the best and safe investment plan in India?
The following are some safe investment plans that generate good returns:
Which plan is best for a child?
Sukanya Samriddhi Yojana savings scheme and Unit Linked insurance Plans are some of the most popular investment plans for financially securing a child’s future.
Which policy is best in LIC for short term?
LIC Moneyback Plan is considered to be one of the best short term plans from LIC.
What is the tax treatment of investment plans?
he tax angle on ULIPs have made it an extremely popular choice among most investors. Tax deduction can be claimed on the premiums paid up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961.
Maturity proceeds from ULIPs are tax free under Section 10(10D) of the Income Tax Act, 1961, provided that the annual premium paid is less than 10% of the sum assured for policies issued after 1st April, 2012. Death benefits payable to the nominee(s) in the event of the death of the life assured are tax free and does not attract any tax liability. If top-ups are included and premiums do not exceed 10% of the sum assured, tax benefits can be claimed on the top-ups under both Section 80C and 10(10D) of the Income Tax Act.
Are investment plans risk free?
ULIPs give investors the dual benefit of insurance and investment. Part of the premiums paid go towards insurance and the balance is invested in a fund of the policyholder's choice. The policyholder is given the option to invest in any number of qualified investments like stocks, bonds or mutual funds.
Although ULIPs are largely an insurance tool, there are risks involved owing to the element of capital market investment. Under ULIPs, the investment risk is borne by the policyholder and not by the insurance company. Equity funds are recommended for individuals with a high risk appetite and whose aim is capital appreciation. Debt income funds are more suitable for individuals who only want exposure to low risk, and whose aim is capital preservation. Finally, balanced funds are an appropriate choice for those willing to take on medium-high risk and want moderate level of capital appreciation.
Can I withdraw my investments?
One of the biggest perks of ULIPs is its partial withdrawal feature. ULIPs give policyholder the flexibility to partially withdraw some amount from the accumulated Fund Value before the end of the policy term. The partial withdrawal facility can only be availed after the policy has completed its lock-in period, which is 5 years.
While there are no rules on how much a policyholder can withdraw, every policy will have its own specific limit and this will vary from insurer to insurer, policy to policy. It must be noted that a policyholder cannot withdraw the entire amount from the fund without surrendering the policy.
