Achieving Life Goals With Insurance Cum Investment Plans

Saving and investing are crucial steps towards attaining financial independence. While saving requires discipline, it pays off in the long run. In this article, we'll explore insurance cum investment plans that can make your financial journey smoother and more fulfilling. Financial experts often emphasize that investments are the cornerstone for building market-linked wealth. If you aim to increase your earnings, investing is the way to go. 

Choosing the Best Investment Plan: 

Investing is not a one-size-fits-all endeavor. What suits one person might not be appropriate for another. This can make it challenging to select the best investment plan. Moreover, the plethora of investment options in India can be overwhelming. Therefore, exercising caution in your selection process is crucial. Consider the following criteria: 

Maturity: 

Assess the time frame of your short-term and long-term goals when selecting the maturity of your assets. Align the maturity period with your objectives. For example, if you plan to buy a car in three years, invest in assets that mature in three years. Avoid locking up your money in assets with a longer maturity period. 

Risk: 

Opt for assets that match your risk tolerance. If you're risk-averse, consider fixed deposits or bonds instead of stocks. 

Returns: 

Remember, the returns you gain are proportional to the risks you take. If you're averse to high risks, opt for safer investment options, and expect corresponding returns. 

Additional Charges: 

Be mindful of potential charges and taxes, as they can diminish your profits. Keep expenses low to maximize returns. Avoid assets with high operating costs. 

Types of Investment Plans Based on Returns: 

For market-linked returns, market-linked instruments have historically been a the best investment plans. ULIPs (Unit Linked Insurance Plans) offer a combination of insurance and investment. The premiums received are invested in equity funds, bond funds, or a mix of both, and the returns depend on the performance of these funds. 

Investing in ULIPs provides the dual benefit of market-linked returns and a life insurance corpus. This two-in-one instrument ensures both financial security for your loved ones in emergencies and the potential for market-linked growth. 

Note: ULIPs issued after 1 Feb 2021 with premiums exceeding Rs. 2.50 lakhs have both short-term and long-term capital gains taxation. Policyholders with multiple ULIP policies issued after 1 February 2021 can choose policies with premiums below Rs. 2.5 lakhs for tax-free status (subject to Section 10(10D) of the Income Tax Act, 1961). 

However, if your ULIP premiums are below Rs. 2.5 lakhs in a financial year, the maturity proceeds are tax-free (subject to conditions in Section 10(10D) of the Income Tax Act). 

Conclusion: 

It's important to remember that if the assets in your fund decrease, your returns may also decline. The equity market is more volatile compared to other financial assets, which means it carries higher risk. Be mindful of this as you navigate your investment journey with the best investment plan.