Investment Insurance Is it Right for you?

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Investment Insurance
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Investment Insurance Is it Right for you?
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An investment-linked best insurance plan is
basically a life insurance plan with an
investment component. It provides both a life
insurance cover and a return on the portion of
your premium that was invested in a sub-fund, a
feature that you can enjoy while you are still
alive and well. Why choose an ILP over a
traditional life insurance plan? Its easy to
see why many consumers prefer ILP. ILPs provide
the possibility of investment growth, since its
underlying assets are linked to stocks and bonds.
In fact, depending on the performance of the
sub-fund to which a portion of premium is
invested, its returns may be higher than that of
your insurance policys dividends and
accumulation rate.
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• ILPs are also convenient to own, in that you
  simply speak with one person to get both your
  protection and earning potential needs. For those
  people who do not have the time to manage their
  own funds, the ILP is a big time saver.
• ILPs also allow for the easy transfer of ones
  investment funds to beneficiaries in the event of
  death. Thats because when you pass away, all
  your bank accounts and investment funds are
  frozen, and your surviving relatives will have to
  go through the legal and administrative process
  to access these funds.
• The only exception will be your investment
  insurance plan, and funds in your ILP, which
  immediately becomes available to your intended
  beneficiary upon your demise or disability.
• However, there are some differences between an
  investment-linked plan and a whole life or term
  life insurance plan. may or may not be there.

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In the traditional life insurance plan, the
premium is guaranteed to be the same throughout
your whole life. In an ILP, this guarantee may or
may not be there. Since there are so many forms
of insurance products now available in the
market, both traditional and investment-linked,
it is necessary to understand exactly what each
product offers. Here are five questions to ask
before deciding that an ILP is right for you 1.
What are your investment requirements? Depending
on their financial status and life stage, people
have different investment needs. For instance,
senior or very young people who have no
dependents might be better off going for a
traditional investment fund placed in an asset
that dovetails with their financial goals.
Conversely, if all you want is investment
insurance coverage, then just consider a basic
whole life or term life insurance plan.
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2. How much risk can you take? ILPs are not
risk-free products, and returns are not
guaranteed. The value of an ILP varies, depending
on how its investment portion performs. In
contrast, a traditional life insurance would have
both guaranteed and the non-guaranteed benefits.
The guaranteed benefits are known to you from the
moment you sign up for the policy while the
non-guaranteed benefits could vary. 3. What is
your time horizon? If you are in a hurry to
realize a return, remember that insurance plans
require a long investment horizon. In fact, they
are primarily meant for your beneficiaries in the
event of your demise. Even if you choose to go
with an ILP, you should not expect returns from
its underlying investment assets to be heavily
substantial, as these are mostly designed for
long-term gain.
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4. What are the fees involved when you surrender
or encash the plan? Do you see yourself encashing
the policy sometime in the future? Do take note
that when you surrender any insurance policy, the
cash value will be less than the money you have
put in. There may also be withdrawal fees and
penalties when you encash your policy. Ask your
selling agent about policies on encashment and
fees and penalties before you make a
decision. 5. What are your financial goals? If
you choose to get an ILP, it is important to
understand the nature of its investment component
to ensure that these are aligned with your
personal financial goals. If you aim for high
growth, then make sure that the sub-fund is
invested in an asset class that can deliver on
your expected returns.
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As with any other investment product, you should
thoroughly discuss your concerns with a financial
planner before signing up for an ILP to know if
it is right for you and understand how it can
help you achieve your financial goals. Source
http//www.abscbnnews.com/business/06/29/15/invest
ment-linked-insurance-it-right-you
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Source https//www.bajajallianz.com/Corp/invest
ment-plans/investment-plans.jsp
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