If you are a risk taker, don’t mind taking risks, market fluctuations don’t bother you and want to raise huge funds with live cover, then you can invest in ULIPs.
Did you know that you can earn from life insurance as well? If you believe that only life cover can be taken from life insurance, then you are wrong. Only life cover is available in a term life plan. In this, the sum assured amount is given to the nominee after the death of the insured. But other than this, there are savings linked insurance plans cover in which a fixed amount is available after the end of the policy term. Let us know how this policy works and how it earns money.
The first in this is the Endowment Policy. Guaranteed maturity benefits are available in this type of policy. In case of death of the policyholder, the nominee gets the benefit of sum assured. This provides great financial assistance to the family of the insured. This type of policy has both death benefit and survival benefit.
Highlights of the policy
A part of the premium received in this policy is spent on the insurance cover and the rest is invested in debt funds. The return earned from the investment is available as survival benefit on maturity of the policy. There are also some plans in which riders like critical illness, total disability, accidental death benefit etc. There are also some plans in which the entire premium is waived off in case of critical illness or total disability.
If you are not in the habit of taking risk or are not very capable to deal with the risk and want to accumulate funds for the future, then you can take advantage of endowment policy. It has the risk cover of life. Along with this, the financial interest of you and your family is also seen. This policy prepares you to save money continuously and with this you build a corpus for the future. The most important thing about this policy is that money can also be taken by surrendering it. In case of emergency before the policy expires, you can take a loan against it.
Money back policy
The second working policy is the moneyback policy. This is also an endowment plan in which life cover and returns are available together. Money back plan money is also invested in mutual funds and money market. The return received from this is given to the policyholder. Unlike an endowment plan, in a money back policy, the person gets a certain amount over a specified period. With this money you can fulfill your needs. If you spend the money received in the policy according to the need or invest it in any other investment instrument, then the opportunity of earning increases further.
After opening this policy, usually after 4-5 years, money starts getting. This money can be up to 20-25 percent of your total sum assured. At the end of the policy, the insured gets the bonus by adding the sum assured. If the insured dies, then the entire sum assured is available. Survival benefit is already given.
Unit Linked Insurance Policy
It is called ULIP in English or Instrument of Investment with Insurance. Market linked returns are also available in this policy along with insurance coverage. Some of the premium you pay goes to insurance and some part is spent in market linked instruments. The money that comes in is put in the Net Asset Value (NAV). Just like in mutual funds. As the name suggests, unit linked insurance money is invested in equity mutual funds.
If you are a risk taker, don’t mind taking risks, market fluctuations don’t bother you and want to raise huge funds with live cover, then you can invest in ULIPs. If you want to take less risk and want to live in balance between the deposited money and its risk, then you can invest in hybrid funds. In this, 50-55% is invested in equities and the remaining 40-45% is invested in debt and money markets.
Children Insurance Plan
Children insurance plans are designed keeping in mind the financial goals and needs of the children. You can take this plan for child’s education or for marriage. Children insurance plan can be either endowment plan or ULIP. Now you have to decide what kind of plan to take for your child. Maturity benefit is available in the name of the child at the end of the policy. There are also some plans in which partial withdrawal exemption is available. You can also take a loan against the surrender value of the policy. If the parent dies during the policy, the premium of the policy is waived in the name of the child and the child gets all the benefits. Tax exemption is available on the premium deposited in this policy. In this, you can claim deduction up to Rs 1.5 lakh.
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