Investment Plans

Let’s understand how a money back plan works with the help of an example:

• Rahul purchases a money back policy that has a sum assured of Rs.10 lakh for tenure of 25 years. She regularly pays the premium of this policy. This plan promises a survival benefit at @ 20% of the amount of the sum assured post every 5 years. This plan also pays the accrued bonuses if any along with the 20% sum assured on maturity of the money-back plan. Therefore, Rahul received Rs.2 lakh after completion of every 5 years of the policy period. In short, he receives Rs.2 lakh in the 5th, 10th, 15th and the 20th policy year. By now, Rahul has received Rs.8 lakh (by the end of the 20th policy period). The plan will also pay Rs.2 lakh in additional to the accrued bonuses and the plan would terminate.

• However, in case Rahul dies prematurely on the 17th policy year, Rs.10 lakh would be paid to his beneficiary/ beneficiaries in addition to the bonuses accrued although Rs.6 lakh must have been already paid to her survival benefit.

Buying the best money back plan would depend on certain parameters such as:

• Your financial goals
• The number of years you wish to stay invested in
• The way you want your payouts to be
• The amount of money you wish to invest in the present date in order to purchase a money-back plan

Considering these important factors, you can narrow down your search on the best money-back plan.

You need to produce the below mentioned documents to buy a money-back policy:

• Income proof: Bank statement, salary slips, ITR
• ID proof: Voter’s ID, Aadhaar card, PAN card
• Address proof: Voter’s ID, Passport, Driving licence, etc.
• Age proof: Passport, Aadhaar card, Voter’s ID.

No, money-back policies aren’t transferable. But, it has a facility wherein you can make an assignment in the name of another person.

Keep in mind the below checklist before purchasing endowment plan:

• Quotes comparison of different plans provided by different insurers
• Financial stability of the insurer
• Services offered as well as the claim settlement ratio of the insurer

Equities as well as large-cap mutual funds are the top investment plans to achieve high returns. But, experts suggest consulting your financial advisor in order to invest as well as balance your investment portfolio.

Gold is certainly a good investment option. Reason being, it beats inflation by aligning the returns along with the inflation rate. The returns that you get by investing in gold are inversely proportionate to capital growth of equity investments. Simply put, gold generate higher returns especially when equity performs poorly.

Mentioned below are some of the lowest risk investments:

• National Savings Certificate
• National Pension Scheme
• Fixed Deposit
• Gold
• Debt mutual funds
• Tax saving Mutual funds
• RBI Taxable bonds
• Senior citizen savings scheme

ULIPs offer a combination of both insurance as well as investment. A certain amount of the premiums paid is put in insurance and the balance amount is invested in funds (as per the policyholder’s choice) such as mutual funds, bonds, stocks, etc. ULIPs are primarily an insurance tool. But, there are risks in this due to capital market investment. Here, the risk of investment is borne by the policyholder. The insurer doesn’t bear these risks. Those with higher risk appetite should invest in equity funds. Those who wish to preserve their capitals and carry a low risk appetite, debt income funds are the best options.  Those with medium-risk appetite should opt for balanced funds.

Yes, NRIs can invest in a ULIP.

No, ULIP doesn’t fall under LTCG.

No, the surrender value won’t be taxable.

Before you make payment for the premiums, these charges are levied that are first imposed by the company initially.