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Life Insurance Investment
Investing your hard earned money is an important task that can help you build wealth over time. While choosing different investment avenues that can generate significant returns for your portfolio, you may have come across life insurance as an investment option, right? ...Read More
To delay is to regret
You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.
Life Cover of 1 Crore @ Rs 21/day***
Life Insurance Investment
Table of Content
Why You Should Invest in Life Insurance?
There's no doubt that buying life insurance financially secures your family's future in case you are not there anymore. But this is not the only benefit it offers. Many life insurance policies also offer investment options, such as ULIPs, under which your family remains protected through sum assured, and you get to tap into market-linked investments for higher return potential.
Listed here are the key benefits of investing in life insurance:
1. Providing Risk Protection
As its name suggests, life insurance financially protects the insured against life’s uncertainties, such as unfortunate/untimely demise. In such cases, your nominee receives the sum assured, which can help them handle their day-to-day living costs and also achieve future life goals in your absence.
2. Developing a Saving Habit
Given that your life insurance policy would lapse if you fail to pay the premiums on time, this condition helps inculcate the habit of disciplined and regular saving, as you have to ensure that you have money to pay the premiums. This saving habit would help you control your spending and prioritize the importance of budgeting.
3. Handling Financial Debts
Life insurance also serves as an important tool for your loved ones and nominees to manage financial liabilities, such as loan EMIs, that may arise in case of your untimely death. The sum assured in the case of life insurance ensures that all such outstanding obligations are covered, thus providing a safety net for your nominees to remain financially secured even if some liabilities exist.
4. Aids in Reaching Long-Term Goals
Life insurance offers twin benefits. First, it provides financial protection for your loved ones, and second, it helps achieve long-term financial goals. Life insurance policies, for instance ULIPs, offer the twin components of insurance and investment, which allow you to achieve both goals. Through the investment component, you can achieve long-term financial goals like owning a home or your child's higher education.
5. Reducing Your Income Tax
To make life insurance policies even more lucrative, the government offers tax benefits. The insurance premiums you pay towards life insurance are eligible to be claimed as a deduction under the Income Tax Act's* Section 80C, up to the maximum limit of Rs 1.5 lakh every year. Additionally, the proceeds from your life insurance policy are also exempt from any taxes under Section 10(10D).
6. Keeping Your Money Safe
As many life insurance policies guarantee a sum to the nominee, your hard-earned money remains safe from the market's ups and downs. This guaranteed sum can be used to meet various life goals, and you can even borrow against your policy's cash value in case any financial emergency arises.
7. Understanding the Stock Market
Some life insurance policies, such as ULIPs, allow you access to the stock market and also enable you to switch your funds across different asset classes. When the market is down, you shift your allocation to debt funds to minimize losses. And when the market recovers and goes up, you can switch over to equity to see your profits soar. You can even switch to better performing funds in the same asset class too.
8. Helping with retirement goals
Many life insurance policies, such as guaranteed income plans, annuity plans, and return of premium plans, aim to ensure that you live a financially comfortable retirement life. Such insurance plans act as a low-risk approach for post retirement corpus accumulation.
9. Find peace of mind
Another big benefit of life insurance is that it gives the much-needed peace of mind, knowing that your family and loved ones’ future would not be jeopardized in case of your unexpected demise.
Summary
Life insurance policies offer you a plethora of benefits, such as safeguarding your family in case of your untimely demise, income tax benefits*, peace of mind, and much more. When utilized wisely, it can help you achieve various life goals as well. Hence, although it is not known as a direct investment product, life insurance can still be considered a vital tool to include in your portfolio.
FAQs on life insurance investment
Q. What is life insurance investment?
Ans. Many life insurance policies come with both insurance and investment benefits, such as the case of ULIPs. These help you not only protect your family's financial future through sum assured but also offer the potential to achieve life goals, such as a child's higher education, through the investment component, which puts your money into the market.
Q. What types of life insurance investments are available?
Ans. ULIPS (unit-linked insurance plan) is one of the most popular life insurance investment options in India. A portion of your ULIP premium goes toward life insurance coverage, while the rest gets invested in market-linked securities.
Q. Are life insurance investments a good option for long-term goals?
Ans. Yes. Life insurance investments can help you achieve long-term financial goals like owning a home or accumulating a corpus for your child's higher education and marriage.
Q. Is insurance a good investment option?
Ans. Life insurance policies such as ULIPs can turn out to be a good investment option, as a part of your premium payment gets invested in market-linked securities, thus exposing you to the potential of higher returns.
Q. Can I buy life insurance as an investment?
Ans. Yes, there are some life insurance policies that offer you dual advantages of insurance and investment, like ULIPs. Besides the insurance coverage, such life insurance plans can serve as a good investment, as a part of your premium payment gets invested in market-linked securities.
Related Articles
- Benefits of Life Insurance | HDFC Life Insurance -
- NRI Life Insurance Policies in India | Secure Your Family’s Future -
- What is Life Insurance? - Life Insurance Meaning and Benefits| HDFC Life -
- Features of Life Insurance: Benefits and Importance| HDFC Life -
- Family Life Insurance
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
Written By:
Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
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Articles on Life Insurance
HDFC Life
Reviewed by Life Insurance Experts
HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.
*Tax Laws are subject to change from time to time. Tax benefits are subject to conditions under Section 10 and other provisions of the Income Tax Act, 1961.
#Provided we have received all the relevant and required documents and no further investigation is required. Claim settlement process would be completed within stipulated timelines once the claim request is approved.
***Online Premium for Life Option for HDFC Life Click 2 Protect Super (UIN: 101N145V05), Male Life Assured, Non-Smoker, 20 years of age, Policy term of 25 years, Regular pay, Annual frequency, exclusive of taxes and levies as applicable. (Monthly Premium of 622/30=20.7).
ARN- ED/09/24/15866
