01 June 2021 – Insurance
Is it good to Invest in Insurance?
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 this explanation changes their whole perspective 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 second category 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 criticizing 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 and If someone ask from from “Is it good to invest in a Insurance”, then you can simply give this brief answer.
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 reason to buy Insurance as an Investment is to save the tax under 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.
Reasons to Buy Insurance
#1 Life coverage
We know that life is uncertain, we can’t predict what will happen to us in the next second. Thus, Insurance is Important to cover the life.
#2 Loan Benefits
Various Insurance products also provides Loan benefits after the completion of certain period and that’s the another reason to buy Insurance.
#3 Guaranteed Return
Endowment plans and Whole life Insurance assure you to provide maturity benefits along with the life coverage. That’s why we mentioned above, Insurance companies evolved with time, according to the need of society with Guaranteed return.
#4 Security of money Invested
There are many Insurance companies that you can trust with regards to your hard earned money. LIC is one of them, they will provide you 100% security on your money and thus we can say that investment in Insurance plans is safer than putting money in FD’s or saving accounts,
This all makes sense that Insurance is also good from Investment perspective too.
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 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 LIC investment plans are –
Bima Jyoti (860)
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 and that’s why it is one of the best LIC investment plan in Endowment category.
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 and that can be a reason to buy Insurance.
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 and I hope now you will never confused with the term, Is it good to invest in Insurance”.
If you still have any confusion or you add something then, kindly mention in the comment box, Apart from that if you are planning to invest in any life insurance or health Insurance plan, then you email us at firstname.lastname@example.org. we will give you totally unbiased opinion.