Insurance
•02 min read
Buying your own house, sending your children abroad for education or giving them a grand wedding, retiring early, starting your own business...who doesn’t have these dreams?
Navigating through today’s landscape requires a well thought out financial strategy, to accrue enough wealth to reach all your hopes and aspirations, while keeping your loved ones safe from financial worries.
But, how can you make this happen?
With an investment-insurance combo plan, of course! It acts as a handy guide to your future, offering a seamless blend of wealth creation opportunities and ample financial protection for your family.
Let’s understand what this plan is and how it works.
This is a type of life insurance plan, helping you diversify wealth creation, while providing you with a protective life cover. It is made up of two parts: market-linked investment returns and life insurance coverage.
Investment part
A portion of your premium is invested in market-linked funds (equity funds, debt funds, hybrid funds, and more), depending on your life goals and risk appetite. You get returns from this investment after the policy term ends.
Life insurance part
The remaining premium is used towards life insurance coverage, which helps keep your loved ones financially secure.
Let’s first understand how the investment portion works:
Picking a fund: You can pick from a variety of market-linked funds, depending on your investment goals and risk appetite.
Units: Your premium is converted into units, based on the chosen fund’s Net Asset Value (NAV) on your day of investment.
Number of units you hold = (Invested Premium – Charges)/NAV
Please note that your investment’s fund value depends on the number of units you hold along with the fund NAV, which changes every day along with stock market conditions.
So, the fund value you hold = Number of units you hold x NAV of that particular day
Premium payment: You may be required to pay further premium amounts at regular intervals, depending on the premium payment duration and frequency you’ve chosen.
Returns: You receive investment returns when the policy period ends. For instance, if you buy the plan in 2025 for a term of 15 years, you’ll get the returns in 2040.
Coming to the life insurance side of things. This cover offers a financial safety net for your loved ones, helping them during times of need. They can use the payout for day-to-day expenses, loan repayment, life goals, and more.
Here are 3 reasons why you should get the plan:
1. Dual benefits
a. It helps you in building wealth through market-linked investments. This can be used for all your dreams like real estate investments, kids’ education or wedding, early retirement, and more.
b. It offers assured life insurance benefits, giving your family ample financial protection.
2. Multiple customisation options
The plan gives you the flexibility to choose a fund to invest your money in, which is typically dependent on your risk tolerance and future goals. Plus, if you’ve invested in a particular fund and aren’t happy with its performance later, you can easily switch to another fund of your choice. And the best part is that switching funds attracts no taxes and sometimes is free of cost as well.
3. Tax benefits
You also get tax benefits on the premium and the payout under Sections 80C and 10(10D) of the Income Tax Act. Please note that this is subject to income tax laws of India.
