We all want to live a happy and financially secured life. For this, people try different means of investments such as mutual funds, equity stocks or insurance policies. However, earlier there were single track plans that may only cover the insured person or you might end up investing in funds or policies or gold etc. to earn returns through market based funds. This created a sense of insecurity into the minds of consumers who would be busy fueling in their hard earned money in market based funds leaving their family insecure during the phase. Therefore, insurance companies introduced investment insurance plans that will allow consumer to investment in market based funds and simultaneously offer life cover for them.
These investment-linked insurance policies (ILP) are life insurance plan that provide you with a combination of protection and investment. A portion of your premiums goes for life insurance protection and at the same time the rest of it allows you to invest in professionally managed investment-linked funds. While you may have the flexibility to vary the level of insurance coverage for your ILPs, a trade-off between the amount of insurance coverage provided and the amount available for investment.
Those consumers who want more exposure to investment compared to life insurance products can adopt Investment insurance policies. But if you are more concerned about getting insurance coverage, make sure the product you buy meets this need. You may need to consider other life insurance products as well. These insurance-linked investment plans offer range of sub-funds that you can choose from. These plans are slightly tricky products and need proper understanding of the markets if you wish to see your money flourishing well. Therefore, it is important you work upon an investment strategy and approach, as well as the potential risks associated.
It is advisable when selecting or switching funds do take your ability and willingness to take risk, investment objectives, time horizon and other personal circumstances into consideration. Never run behind returns, always make sure you’re comfortable with the risks and that you are consistent with your risk profile.
Although some products offer greater potential for higher returns but they come with an increased likelihood of losing money or not performing as expected by the end of your investment horizon. Instead you can opt for debt funds that will yield modest returns in exchange for relative safety. Never be too emotional and pool you money in one particular fund. Instead talk to your financial expert and spread money evenly so that you can compensate losses, if any product fails and produce an evenly balance financial results.
Investment insurance also allow you to move your money from one sub-fund to another known as fund switching and may be helpful if your financial circumstances and risk appetite have changed or you no longer find your current funds suitable for your financial goals.
You can monitor your Investment Insurance Policy by checking the unit prices published daily in newspapers, website, finance application on smartphones etc. Many ILPs give you the flexibility to vary the insurance coverage and investment mix if you’re financial needs change. You may top up your investments, make withdrawals and switch sub-funds as well.