How to Use a Life Insurance Investment for Smart Financial Planning



Purchasing insurance can be a tedious process. Since there are so many options insurance policies available in the market, it can be a very confusing to choose the best investment plan for yourself, especially when it comes to life insurance. You might want to invest in a plan that gives you a good coverage for life, or you might choose one that gives you additional returns. You will need to select the right policy depending on your individual needs and specific requirements. With your budget, you can compare all the available types of investment plans and choose the one that gives you the best coverage as well as helps you achieve your financial goals.

Along with the obvious benefits and the coverage that a life insurance policy can provide, you can also use your life insurance investment for smart financial planning.

If you want to invest in a life insurance policy that will also help you achieve your financial goals, then the best way to invest money would be to opt for Term Life Insurance. From among all the different life insurance policies, Term Life insurance make for the cheapest and safest option to create a financial security for your dependent family. In a term life insurance, the entire sum assured is paid to the nominees in case the policyholder passes away; this can help the nominees sail through any financial emergency. However, if the policyholder survives till the end of the policy term, then nothing is payable by the insurer and the cover ceases. If you want returns from your life insurance plan, you can also opt for Return of Premium (RoP) plans, that will give you your money back when if you live beyond the end of your policy term – of course, the premiums are a more expensive option.

Term Insurance is the only kind of life insurance that offers you with maximum coverage at the lowest cost. You can also now purchase life insurance until the age of 99 years and beyond. However, if you are looking for long-term protection plan, you should opt for a whole life insurance plan. Since the death benefit is guaranteed in this type of insurance policy, the premium rate is also nearly three times higher than the regular term insurance plan.

When you are choosing to go for a TROP or a whole life plan, then there is an additional cost of approximately Rs 10,000-30,000. TROP surely has money return benefits, but it is still more beneficial to go for term life insurance plan. And as for returns, ULIP is a good option since even though whole life insurance gives benefits to your nominees and TROP returns your premium, it still doesn’t grow your investment much over a time period.

If you invest an additional premium of Rs 10-30K in a ULIP for a period of 30 years, you can easily make Rs 1-2 cr. Therefore, the best option would be a combination of term life insurance and ULIP – a mix of insurance and investment for an ideal and effective financial planning.

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