Investment Insurance: One of the best tools to build healthy corpus

With the growing inflation rate, global economy turmoil, political unrest and other issues, it has become important that every individual should work upon some sort of investment plan to secure family future financially. In the event of doing so they either buy insurance plan or end up investing money in any particular investment plan which is not a guaranteed security in any form.

Therefore, insurance markets have introduced investment insurance plan where a portion of your premium is reserved for offering life cover to your family and rest is pooled in the market-linked funds. These market-linked funds are equity based, debt based and balanced funds. You can invest money as per your call and risk appetite in these funds. Thus, investment-linked plans have come as real stress busters for millions of people who can focus on earning great returns from market and simultaneously cover their family with insurance cover.

Investment plans like endowment and money back plans are purely savings plan as they offer guaranteed maturity amount after the completion of tenure. However, when calculated the returns you will always find them lesser compared to market linked investment insurance plans.

Investment insurance plans (ILPs) provide protection cover in the event of death or total and permanent disability (TPD), if included. Depending on the policy, the death or TPD benefit may comprise the higher of the sum assured or value of ILP units or some combination of the both i.e sum assured and the value of ILP units.  In ILP your risk tolerance plays important role in defining your investment approach. So if you want more exposure to investment other than life insurance products you can choose the ILPs option. But if you are more concerned about getting insurance coverage, make sure the product you buy meets this need. You may need to consider other life insurance products.

Investment insurance plans offer you options like equity, debt or balanced funds so that you can plan well on channelizing your savings. You can either choose to invest all your savings into equity or debt and even a mix of the two. The choice entirely depends on your personal risk appetite and the horizon of investment. If the arc of your investment is big enough it makes sense to mobilize your resource into equity. As maturity approaches you can gradually switch to a fund that invests predominantly into debt to avoid investment risk. This will surely be a good move while designing your best investment Insurance plan for your future prospects.

Since, these are market-linked funds it is important you have a sound knowledge on market movements, current situations and future projections. If you’re not so market savvy person, no worries, your financial expert can help you sail smoothly during market volatility. So consult them time-to-time and monitor funds at regular intervals. Never get too emotional and pool money in particular fund or get panic during market crash and sell off in losses. Your risk appetite is important so don’t take plans of higher premium costs beyond your income source else you might end up not paying premium and thus policy lapse. Fund switching is the best feature that market linked funds offer as it helps you reshuffle the investment portfolio if particular fund is not working for you from quite a while. You can also work on long-term or short-term investment insurance plans.