Investment Options to Opt for Before 35

 

In this policy, the investment risks in the investment portfolio is borne by the policyholder

Making decisions about investment is challenging for the best of us. There are several investment vehicles on the market, and instruments range from the fixed type to those in which you may be taking some risks, like mutual funds. With so many variations and permutations, what should you choose? If you are young, below 35 years of age, this is the best time to invest. Investing young gives you foresight into the future and helps you to plan your finances better. Furthermore, investing at a young age makes you more eligible for a lot of plans and you have a wider array to make your selection. Choosing your plan, one that matches your individual requirements, becomes easy with online applications and easy ways to access information.

Life Insurance Options

While people may not want to buy life insurance plans due to perceived high premiums, today, life insurance plans can be cleverly combined with investment. If you are young, there is no better way to go about buying insurance and investing than all in one policy. Several individuals, who do make choices about insurance, may not be educated about the plans that offer dual benefits of insurance and investment. However, millennial nowadays know the importance of investing early, and building a large corpus for the future. With life insurance thrown in, you get advantages to earn returns while you have a long employment career ahead, and assure financial protection for your family should any unforeseen circumstance take place. In this way, you have three great schemes in front of you - a ULIP, an endowment plan, or a term insurance plan. Each has its own features and you can choose the one that suits you best after reading about them.

Unit Linked Insurance Plan (ULIPs)

One of the best plans today, blending insurance and investment is a ULIP. Unit Linked Insurance Plans (ULIPs) are perfect as they are financial plans for life insurance needs and investment as well. The highlight of a ULIP is triple-fold. In its clear perks, you get to create wealth, have insurance and save tax as well. You are free to select whatever funds you would like your capital to be allocated to in a ULIP. You can decide this according to your time horizon and appetite for taking risks. As a result, ULIPs give you tailor-made schemes which are unique in life insurance policies.

Since ULIPs invest your capital in the markets, either in debt funds, equities or both, your returns from a ULIP may be substantial, but these are not guaranteed returns. It all depends on how securities in a fund fare in the markets. Nonetheless, ULIPs can be a great benefit for life insurance cover as they offer you the flexibility of switching funds. It is also possible for you to tweak your original investment, making changes if you have more wealth to invest, without any bother. Furthermore, you get a tax benefit on a ULIP in case of the sum assured (with no tax to be paid) in the event of the demise of the holder of the policy^##.

Term Plans

Among the most simple to understand life insurance policies is term insurance. Once you know what a basic term plan offers, you may feel that this meets your requirements. However, choosing a plan should entail a thorough evaluation of features of the plan. A term plan offers a particular tenure of coverage during the term of the policy, and if the holder of the policy has an unfortunate demise, an assured sum is paid to the nominee. The payout may be opted for as a lump sum, or as monthly periodic payouts. Term insurance gives you a maximum amount of coverage with a very minimal premium amount. In case you are just starting out in your career, this is a good plan to opt for. Since a term plan is basic in terms of life insurance coverage, it does not demand exorbitant premiums.

Term insurance plans are not investment plans, just basic life insurance plans. The benefit is the financial safeguard offered to your loved ones in the event of your unforeseen demise. Nonetheless, certain life insurance schemes are evolving, and you may find maturity benefits in term plans too. Additionally, term plans give you superb tax benefits under Section 80C of the Indian Income Tax Act (1961)^*. You can get tax deductions that go up to Rs. 1.5 lakh on the premium paid. Tax benefits are also given on the death benefit in these plans. You should find out more details from your insurer.

Endowment Plans

Among the most popular life insurance products, endowment plans provide combined advantages of investment and life coverage. You may just think that this is a good investment if you wish to generate wealth while getting insurance coverage. Endowment plans offer you the opportunity, not just for life coverage, but also for saving a corpus for any financial requirements like your retirement, buying a home, a child’s further education, marriage, etc. You can meet the costs of major financial milestones with this plan. In the event of the unfortunate demise of the holder of the policy, a nominee receives a sum assured by the coverage. In the event the holder of the policy survives the policy’s term, the maturity amount is paid. Additionally, any applicable bonus due is paid out too. Apart from this, features include tax advantages that you are eligible for under Section 80C and 10D of the Indian Income Tax Act (1961)^#, with tax deductions on premiums you pay as well as on maturity benefits.

Related Article

• What is ULIP Plan?
• What is Term Insurance? Definition & Meaning
• Why are Endowment Plans the Preferred Saving Tool?
• What Will Happen When a Term Life Insurance Policy Matures?
• 4 Simple Methods to Calculate : How Much Term Insurance You Need

ARN – ED/09/22/29666