If you're a singleton and think that you don't need any insurance cover, besides a mandatory third party insurance policy for your car, you're wrong. Most people think insurance policies should be bought only in case of a property or if one has liabilities and dependants like parents, spouse or children. But in fact, singletons have a very important responsibility: to themselves and their future.
Today's market is replete with all sorts of policies and making the right choice is a daunting task. Therefore, it is wise to invest in three types of cover that will see you through your prime and sunset years. These are ULIPs, Money Back Assurance Life cover and Pension Plans.
A life insurance policy is essentially a contractual agreement between an insurance policy holder and the insurance company where the holder pays a fixed amount to the insurer. This is done on the agreement that the insurer will pay a designated beneficiary a sum of money in return for a premium, upon the death of an insured person (often the policy holder).
Unit-linked Investment Policies (ULIPs) have the dual benefit of being an investment and insurance. Here, a portion of the premium paid by the policyholder is utilized to provide insurance cover while the remaining portion is invested in different types of equity and debt schemes. There is also the option of choosing debt or equity funds or a combination of the two as part of the ULIP plan.
Endowment Plans or a Money Back Insurance policy as the name indicates gives the policy holder money back after a fixed time, normally the maturity of the policy. They are spread over a period of 10/15/20 years.
A pension plan or annuity is a retirement planning scheme, which gives periodic payouts to the policy holder at the time of retirement. You can either make a one-time payment into the annuity or deposit fixed sums over a period of time. At the time of maturity / retirement, the annuity will start giving payouts to the policy holder at a predefined frequency which could be monthly, half yearly or annually.
Benefits of ULIPS
· ULIPS are flexible investments
· You can choose from high, medium and low risk options under the same policy
· ULIPs offer the benefit of partial withdrawal or complete withdrawal
· ULIPs provide tax benefits
Benefits of pension plans
· You can build a retirement corpus either over a period of time or by paying in a lump sum
· They are a great tax saving option
· A pension plan with an equity component is a wise option
Benefits of Money Back Insurance Policy
· This policy helps in tax savings
· Under this policy, periodic payments meet your long term as well as short term financial goals
· It provides you with a life cover and complete benefit of survival after each interval
While buying these polices always read the fine print and compare existing policies --premium, benefits, disadvantages, sops, terms and conditions--to see what suits your needs the best. It's always best to buy an insurance policy online as it saves time, is cost effective and is a transparent option.
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