How Can Life Insurance Prove Useful While In Returns?

The primary objective of buying life insurance is to get coverage against unforeseen risks. But that is not enough. Many of you may be thinking that life insurance is such a wasteful expenditure if in case it does not get utilized anytime sooner. But is that so?

The insurance industry in India is getting matured and there are several ways through which you can use insurance as an investment instrument which is able to generate handsome returns for you in the long run.

Traditional life insurance policies do provide returns. However, the rate of return is quite conservative and equal to returns provided by government securities and other debt instruments.

If you are expecting better returns, you have to take some risks. Unit Linked Insurance Plans (ULIPs) are the potential options to you. The insurance policies issued under such mode are issued as units just like mutual funds. A certain part of these units are invested in the stock market. The proportion of investment in stock market and other securities is pre-determined and approved by you.

The risk is that in the short term, stock markets may not appear to perform well and thus you may get dissatisfied with the results. Here you have to understand that stock market investing is about the long term. You have to have some patience and keep a horizon of at least five years.

It is advisable to not look at the net asset value (NAV) of your units more frequently. It is good to keep track of what is happening with your investment. At the same time, you shall set your goals with long term perspective and then do not get nervous when things look volatile. If you really get uncomfortable with the volatility and uncertainty linked with stock market investing, then you may reduce your exposure in congruence with the insurance service providing company.

Apart from better returns in the long term, ULIPs also come up with another way of generating returns – this is rather an indirect way. Under the Income Tax Act, ULIPs are eligible for exemption. An amount of up to Rs 1 lakh could be claimed for exemption by submitting the proof of investment in ULIPs.

Therefore, if you have invested Rs 1 lakh in ULIPs in a year, and for example, you come under the income tax bracket of 20 per cent, then you will end up saving tax of as much as Rs 20,000 in a year, directly. You may say that you were able to generate assured annual returns of 20 per cent right at the beginning. Thereafter, whatever returns are pumped out from the investment, it is an extra over that 20 per cent. Isn’t it a great deal?

Think about the fact of Best Investment Plans  rather than following primitive methods of saving. An investment can be termed as useful and productive only if it promises to deliver timely returns to the highest level. People who tend to become insured are the ones who have maximum financial security in terms of futuristic goals and are usually safeguarded against the financial odds which may hamper the growth. Buying insurance policy can ensure the future well being of you and your loved ones. The right plan which suits the need and preference is very important to look out for. Rather than going around asking various experts about the same, isn’t it better to become an expert yourself. Comparing insurance plans online can give you a detailed report of terms and policies of an insurance policy and that too in less than a minute. Isn’t it a value for time and money? Policyx.com is one such website which helps in providing a brief understanding of insurance plans and their terms. Be assured while investing, after all no one wants to take a wrong step.