Financial experts often emphasize on choosing the right investment plan to meet financial goals. But choosing from a wide range of plans can be tough if you are new to investments. The financial instrument you choose for investment should align with your financial goals, risk appetite and even investment horizon. It only adds when an investment also gives your family the security cover in case of your unfortunate death. Well, most life insurance companies provide plans that meet the said purpose. You can call these life insurance cum investment plans. Multiple benefits of investment plans include –
- Life cover – Helps protect your loved ones financially in case you’re not around
- Critical illness cover – An add-on benefit by which you can get a lump sum amount when diagnosed with a serious illness
- Accident cover -Offers financial protection in case of disablement, dismemberment or death
- Investment benefit – Helps you earn market-linked and fixed returns, depending on the plan you choose
Let’s read this page further and know about the benefits of investment plans. That will draw you close to the option that would suit you.
Types of Investment Plans
Life Insurance cum Investment Plans include Unit-linked Insurance Plans, Endowment Plans, Money Back Plans, Retirement Plans, etc. These plans come with distinct features and benefits meeting the requirements of different customers. Let’s check the same below.
Unit-linked Insurance Plans (ULIPs)
ULIPs are an investment plan comes with great benefits. It starts by investing your money in different financial instruments to fulfill long-term goals, and a life cover to financially protect your family in case of an unfortunate death. The premium paid under the ULIP is divided into two parts. One part is earmarked for your life cover, and the remaining will get invested in the fund of your choice. You can choose to put your money in equity, debt, or a combination of both funds as per your risk appetite and goals. This makes ULIPs an ideal investment option for many.
Besides, you’ll get the following benefits –
- Fund value at prevailing net asset value (NAV) upon survival till the end of the policy term
- Fund value or sum assured, whichever is higher, is payable to the nominee in case of your demise
- Guaranteed loyalty additions when you stay invested for a long period
- Bonuses like simple reversionary or terminal as declared by the company
- Partial withdrawal facility to meet mid-term financial needs
An endowment policy is a life insurance policy that, apart from covering the life, helps you save regularly over a specific period so you can get a lump sum amount on maturity. This maturity amount can be used to meet various financial needs such as funding children’s education, marriage or buying a house. This also comes as whole life insurance providing coverage up to the age of 99 years. And the benefits of this investment plan are as follows –
- Death benefit for the nominee in case of your death
- Maturity benefit payable at the end of the policy term
- Loan option against the policy
- Participation in profits that will be payable as a simple reversionary bonus
Money Back Policy
This life insurance plan is different from the above two as it provides you the maturity benefit plus money back benefits during the policy term. So, your mid-term financial needs are also taken care of. Take a look at its benefits below –
- Money back benefit is payable as a percentage of the Base Sum Assured or Paid-up Sum Assured
- Maturity benefit is payable irrespective of the survival
- The death benefit is payable to the nominee in case you die during the policy term
- Guaranteed additions enhancing the base sum assured
A retirement insurance plan is designed to provide you regular payout similar to a pension. An annuity helps you get regular payment for life after you’re done with the investment. The life insurance company invests your money and pays it back with returns generated over the same. Following are the types of annuities available –
In this, there is no accumulation phase and the plan starts working right from the vesting date. You can purchase it with a lump sum and the payment starts immediately either for a limited tenure or lifetime. The following are some of the options available –
- Single Life Immediate Annuity for Life (without death benefit) – A fixed income, as decided at inception, will be payable throughout the life as per the mode chosen by you. But the payment will cease upon your death.
- Single Life Immediate Annuity for life (with death benefit) – You can receive income throughout life as per the chosen mode. And the payment will cease upon your death, and your nominee will get 100% of the Single Premium.
- Joint Life Immediate Annuity for life (without death benefit) – A guaranteed income will be payable as long as at least one of the life assured is alive. And this stops upon the death of the last survivor.
- Joint Life Immediate Annuity for life (with death benefit) – A fixed income will be paid as long as at least one of the life assured is alive. And the payment will stop when the last survivor dies, and the nominee will get a death benefit of 100% of the Single Premium.
The annuity payment starts after a certain date as shown below –
Accumulation phase – It is the phase when you invest and the accumulation of cash starts from the date when you first pay a premium.
Vesting phase – It is the date from which you will start getting the payment in the form of pension.
Check out the options available under this
Single Life Deferred Annuity for life (with death benefit) – A fixed income payable throughout life, after the deferment period is over. In case of death, the payment stops and the death benefit shall be paid to the nominee.
Joint Life Deferred Annuity for life (with death benefit) – Get guaranteed income as long as at least one of the life assured is alive, after the deferment period is over. Income stops upon death of the last survivor and the death benefit is payable to the nominee.