Skip to main content

When to choose traditional insurance policies and when ULIPs

Buy Gold Mutual Funds

Invest Mutual Funds Online

Download Mutual Fund Application Forms

 

CHOOSING the right life insurance product is not easy. It requires careful thought and consideration, and, a thorough evaluation of your present financial circumstances and your requirements in the future.

Life insurance products are broadly categorised into traditional and unit linked (most commonly equity-linked) products. The difference between traditional and equity-linked products depends on whether the investment risk is borne by the insurer or by the customer. In simple terms, a traditional product is where the premiums are invested by the insurer (as per the regulatory investment guidelines) and the customer gets certain guaranteed and non-guaranteed benefits for paying and non-guaranteed benefit premiums. In unit-linked products, the customer chooses (from a list of available funds), the investment option, and, his/her premiums are allocated after deducting charges. The value of these invested funds could then go up or down depending on the performance of the underlying investment (typically equity shares), and this risk is borne the customer and not the insurance company.

So, how does one decide which product is more suitable? Before buying, it is important that you review your financial plan.

One should note that the core objective of buying insurance is protection of the family in unfortunate circumstances. Whichever type of product you choose, first ensure that the level of protection is in line with your requirements, that is, your income, number of dependents and age. In both traditional and unit-linked products, you can tailor the protection level by choosing the appropriate sum assured and add-on protection riders. Once your family protection is assured, we can set out some general guidelines.


Are you comfortable with investment risk?


The past experience of investment returns suggests that equity investments have the potential to deliver superior returns over a longer period of time. In the interim, however, your investment value will go up or down. Higher the investment risk, higher the potential reward. Hence, if you are looking for longer-term gains, and have the risk appetite of being comfortable with your investment values moving on a daily basis, go for equity-linked products. Traditional products, typically, invest a limited (regulated) percentage in equity and, hence, the potential returns are lower.


Do you need your investment to provide a minimum guaranteed return? Traditional products will, typically, guarantee the payment of the `sum assured' on maturity or in the unfortunate event of death of the insured. For equity-linked products, if you have the choice of equity investments, then, there is no guarantee of return or protection of the invested capital. Are you likely to change or control your asset allocation during the investment period? In unit-linked products, you can see the value of your investment on a daily basis through the net asset value (NAV), published by insurers on their website. If you don't want to actively manage your asset allocation and are comfortable with the insurer's guaranteed returns over the policy term, then go for traditional plans.


Do you understand the implications of early exit or discontinuing premiums? You may be unable to pay your premiums for the planned premium paying term. All life insurance products are suitable for long-term financial goals and, hence, there are costs associate hence, there are costs associated with premature surrender, and often, with discontinuing premium payments. In unit-linked products, there is a five-year lock in, during which, you will not be able to access your funds and stopping premium payments Traditional products normally provide some flexibility on withdrawals through loans against the policy, which are available from the insurer

 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds        Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds     Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds    Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds             Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds              Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Gold Mutual Funds             Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

How much to invest in gold ?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Let your motivation dictate the share of the yellow metal in your portfolio Enough has been said and written about gold as an investment option. The latest argument is that the craze for gold among Indian households is endangering our country's balance of payments. The policymakers are busy trying to find ways of discouraging investment in gold, but if households keep the common good in mind, they would be paying the market price for gas cylinders as they do for, say, their mobile phone bills. After all, private decisions are driven by private motives. So, how should a household look at gold from its own perspective? Gold is primarily acquired for its merit as a store of value. Even if the worst crisis hits a family, the gold that it holds could be put to use anywhere in th...
Read more

Save Tax With Mutual Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300       Mutual funds are ideal as long term investment avenues for retail investors. To encourage investments in this avenue, the Government of India offers investors a spate of tax benefits thus ensuring maximum benefit from mutual funds held beyond a year. Sample some of the key benefits and refer to the table for a detailed list of tax rates for different types of schemes ·        Avail deductions under Sec 80C of the Income Tax Act by investing up to a maximum of Rs. 1 lakh in designated Equity Linked Savings Schemes (ELSS). Such investments have a compulsory lock in period of 3 years. ·        First time retail investors in equity with a gross total income of up to Rs. 12 lakh can invest up to Rs. 50,000 in specific MF schemes un...
Read more

Mirae Asset Ultra Short Term Bond Fund and Mirae Asset Tax Saver Fund

Mirae Asset Mutual Fund   has renamed   Mirae Asset Ultra Short Term Bond Fund , an open ended debt scheme, to   Mirae Asset Tax Saver Fund   with effect from October 18, 2016. Also, Mr. Sumit Agrawal, the co-fund manager of Mirae Asset India Opportunities Fund (MAIOF) and Mirae Asset Great Consumer Fund (MAGCF) ceases to be the fund manager with effect from October 1, 2016. Consequently, MAIOF shall now be solely managed by Mr . Neelesh Surana while MAGCF shall continue to be co-managed by Mr. Neelesh Surana and Ms. Bharti Sawant. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. ID...
Read more

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Read more

Diversification is key to gain more

Even those who prefer debt for its safety are looking at more options    It is not often that you find more than a couple of asset classes producing good returns at the same time. Invariably, assets such as gold and equity don't perform in tandem, and hence it was easier to allocate to them in line with the risk profile of the investors. In the last couple of quarters, however, more than one asset has turned attractive - gold, debt and equity. In line with the trend, you even have monthly income plans with a combination of more than two assets.    In the past, those who stuck to debt were a different class of investors who didn't wish to take risk with their money. The changing lifecycles and the growing integration of investment markets across the globe have pushed even individual investors to embrace the concept of asset allocation. Hence, you have individuals who were using debt to park profits being prepared to take advantage of other assets.    For instance, when the...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now