policies need a lot of study before purchase unlike term insurance products where
we shall arrive at the purchase decision by just taking a few factors into
consideration. Any investment policy has to be selected based on our
requirement. This requirement can be identified by profiling. Profiling is
listing out the financial details such as annual income, investment, other
sources of income and loans. These details need to be kept side by side with
the financial goals for the next 15 - 20 years. Now, a conclusion can be drawn
on how much investment to be made and what is the required corpus.
deciding the premium and corpus required, we can start browsing for investment
plans which will fit our requirement.
to be considered, while purchasing investment Plans
1. Premium payment term:
Premium payment term, will decide the maturity returns that we would receive at
the end of the investment period. Longer payment period is advised for people
looking for high returns with low premiums. Otherwise, lower premium payment
term with high premium rate is recommended for short term investors.
2. Policy term:
Policy term is to be aligned with the future goals. A 35 year old person who
wants to retire at 55, needs to take a policy for 18 year only. This 2 years
will give a chance to modify his plans or plan for next 10 years, if any
3. Bonus rate/ Loyalty addition:
Bonus or loyalty addition will constitute the major chunk of returns. So,
bonus/ loyalty addition should be high in order to yield better returns. These
additions are generally announced every year, which will vary based on
company’s performance. The bonus/ Loyalty history of the respective insurer
have to be checked to get a fair idea of bonus rates further.
4. Money backs:
Some policies offer money backs, which will be given in regular interval of
time till the policy term ends. Money back plans are good option if your
financial status is instable. These plans will give less returns compared to
other plans, as returns are being provided in multiple trenches before policy
term ends. Still these policies are worth purchasing considering “Time value of
money” (Value of money today is higher than value of money tomorrow).
5. Insurance cover:
All the investment plans from insurance companies will have life cover as their
default feature. As the target is insurance, most people bat an eye for
insurance part. But, insurance coverage part should be considerable enough to
cover family financial security.
6. Lock in period:
Lock in period is the time the premium needs to be paid before the policy can
be surrendered. This will be 3 years in most of the products, but will vary.
Lock in period needs to be as low as possible, in order to close the policy if
case of contingency.
7. Surrender value:
surrendered after lock in period needs to get high value rather than ending up
with minimal returns. Agents won’t specify these details, because agents are
not co-operating in surrendering policies, due to commission they are lose if a
policy is surrendered. To check this issue policies can be purchased online
from platforms like insurance web aggregators. This will simplify the process,
make it transparent and provide hassle free customer service.
into account above factors, purchase decision of investment policy has to be
done. This will ensure successful purchase and better returns.