As a financial advisor I always come across this most asked question – “is it good to invest in insurance ?”
And in answer to this statement I always say it is not good or bad it is necessary to invest in insurance and the explanation I give to them after this changes their whole view towards insurance.
Most of the population of India generally sees the insurance as a liability as they always presume that nothing bad will ever happen to them so whenever someone approaches them with an insurance product they back off very quickly.
Then comes the people who really wants to invest their surplus or saved money and always seek for the investment opportunities in the insurance sector,
But they end up criticising the insurance sector for less rate of return compared to mutual funds and stock market which is completely wrong as insurance is all about the security of you and your family in case of any kind of emergency.
The simple purpose of the insurance is to give you the protection and security against the emergency and that protection cannot be earned or enabled by any kind of investment apart from insurance.
Because the facilities like risk coverage,loan against the invested money is not given in any type of investment, whether it is stock market or the mutual funds.
So this clarifies that the insurance is a necessary investment not a good or bad one.
But with time insurance companies are getting stronger in the game of investment and coming with new and improved plans which fulfills both the requirement of security and investment which arises the question –
How is it different from other investments ?
As I mentioned earlier insurance is all about security and now as companies are shifting it towards security with investment every investor is curious about the invest type and opportunity available in it.
The major advantage and the insurance investment in the insurance is the tax saving under the section 80c.
Every year during the closing of the financial year the person who pays the tax can save the tax upto 30% if he has an insurance policy as they exempts the tax upto 30%.
Not only this in the end of insurance policy i.e. on the maturity of a policy the maturity settlement money is tax free.
These two are the major difference insurance investment has in it.
Other benefits are also there like –
- Risk coverage
- Loan against the investment
- Guaranteed return
- Security of money invested
This all makes the investment in insurance different and good from other investment options.
But investment with any other company will not be a good move as all of these benefits are given by LIC and it is a government corporation so it is reliable and secure.
LIC’s Investment Plans
In LIC there are a wide variety of plans and each plan is designed for a specific audience in order to fulfill the specific purpose.
The major investment plan in LIC are –
– This is an endowment plan launched recently in 2021. This is a guaranteed return plan which gives the guaranteed return of two times of sum assured on the maturity of the policy term.
Jeevan Anand (915) –
Jeevan anand is an endowment plan which has this unique feature of risk coverage throughout the lifetime of the policy holder. The return is similar to the bima jyoti mentioned above.
Ulip plans are the best ones for the investment as they are directly linked to the nifty which and gives the guaranteed return. The rate of return is equal to the mutual funds as they are linked to the growth of the nation and that definitely increases with time.
Apart from this the heavy return you get on maturity is non taxable and it also saves your tax every year too.
So, If we take all of these factors in consideration then the ulip plans give the return higher than the share market and mutual funds with the benefit of security i.e. risk coverage.
In conclusion we can say that the comparison between the insurance investment and other investments is not a smart choice as security is necessary because life is very uncertain.
But Nowaday the investment plans like Ulip from LIC have changed the whole game of the market. Now in the modern market the Insurance gives protection with a high rate of return.