Buying life insurance is one of the most important investment decisions we make. If we living in the nineteenth century, this would not be very difficult. we would go to the insurer, be a calculated premium, and get an economic cover to take care your family’s financial needs after you are gone. But with time our needs have evolved and so as life insurance. That is why when we go out to buy a life insurance, there are so many options. Options that just don’t cover unforeseen, death but help grow our investment to meet other life goals.
Nowadays, Investment planning is one of the essential tasks in your life. While planning your investment one should keep in mind his / her Future financial, medical and other essential needs. so basically there are three categories of life insurance- Term plans, ULIPs, endowment plans.
The affordable Term insurance plan
A term insurance plan is the best and affordable form of financial protection that will help your family meet its financial goals without your presence. This plan offers peace of mind with very reasonable premiums expense plus a life cover that you can choose depending on your family’s lifestyle and financial needs. The benefits include- Flexibility, tax saving, lowest premiums. The disadvantage is that its premium increases with advancing age. So this plan may not be economically suitable for old age people. Moreover, It will also not help you provide any income or capital needs of your family while you are living. So this insurance plan is useful only when your budget is tight.
Tax savings investment-Unit linked insurance plan
A ULIP is an insurance plan where the premium amount is invested in equity or debt instruments. You will get a deduction u/s 80C of the Income Tax Act. So, you can deduct ULIP premiums amount from your taxable income up to the permissible limit u/s 80C, which is currently at Rs. 1.5 Lacs. The only condition is that the premium amount deductible shall be up to 10% of the sum assured under the ULIP. So, if the sum assured is Rs. 15 lacs and you pay the premium which is less than Rs. 1.5 lacs, then you can claim entire amount deduction u/s 80C. The withdrawals in ULIP may occur in the following instances:
- Death of the policyholder
- The Maturity of the policy
- Partial withdrawal at the choice of the policyholder.
Endowment plan is a mix of insurance and investment. This means if during the term of policy that life assured dies, in such case his family will get the benefits. Benefits are sum assured under the policy and also if there is a bonus or guaranteed returns or something that will also be paid to the beneficiaries.This plan offers Tax benefits under section 80 C and 10 (10D) of the Income Tax Act which is really motivated for investors. Moreover, in case of financial emergency, one can obtain the loan against this policy.
Choosing Life insurance
Before jumping into selection with any Life Insurance Company for investment few important points must be considered: BRAND STRENGTH, CREDIBILITY etc of the Co. Based on the IRDA Claim Settlement Ratio 2016-17, out of all companies below mentioned are the Top and Best Life Insurance Company in 2018. You may differ in my view and come up with a different set of ideas.
1: Life Insurance company
2: ICICI Pru. Life Insu. Co.
But as a life insurance advisor, I advise investors to buy insurance products of ICICI Prudential Life Insurance. It is one of the leading life insurance companies in India. We provide insurance plans & policies that include a range of products like Garneted Child Education Plane, Unique Term Insurance, ULIPs, Pension & Retirement solution to look after your financial needs. The investors will get deductions for all plans under an income tax.
Brand Strength:- As per IRDA report ICICI Pru. Is having 00.33% pending climes in the Year 2016-2017.ICICI Pru. Life Insurance company introduced TERM PLAN before LIC. ICICI Pru. Life Insurance Co. is the first Insurance Co. to launch IPO in the year 2016. This shows the credibility of the Co. Because It gives more retunes in Endowment planes and as well as in ULIP.
A unique term plan (MORE THAN JUST A TERM LIFE INSURANCE PLAN) One must also look at added benefits that a TERM LIFE INSURANCE PLAN provides for his/her future needs. While buying a ULIP one should careful that IRDA does not announce any bonus. Anybody receiving such calls is requested to lodge a police complaint. As a life insurance advisor, I request you to read carefully all the documents before investing.