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Which type of investment yields the highest returns?

dateKnowledge Centre Team dateFebruary 01, 2021 views110 Views
Which type of investment yields the highest returns?

A skilful investment requires the best investment plan with returns as a promise. Canara HSBC Oriental Bank Of Commerce Life Insurance offers saving plans to help you pursue disciplined and periodic investment in various overtime funds to achieve your potential financial objectives. Canara HSBC Oriental Bank Of Commerce Life Insurance promises to provide the best investment plans with returns tailored to your needs.

Why should you invest?

Investments are necessary because making money isn't enough in today's day and age. For the money you earn, you work hard. But for you to pursue a modest retirement or accomplish the hopes and ambitions, it may not be sufficient. It would be best if you made your money work hard for you, too. Start investing. Money lying idle is indeed an asset wasted in your savings account. To get high returns out of it, you must invest that money skillfully.

How to choose the right Investment Plan?

Canara HSBC Oriental Bank Of Commerce Life Insurance knows the importance of how important insurance over investment is. To suit India's needs for attaining the benefits of both insurance and investments, Canara HSBC Oriental Bank of Life Insurance presents the Unit Linked Insurance Plan (ULIP), an excellent plan for those who want to avail the best of both insurance and investments.

Unit Linked Insurance Plan (ULIP)

A ULIP (Unit Linked Insurance Plan) is an excellent investment opportunity that incorporates insurance and investment components. A portion of the premium amount paid in ULIP provides you with insurance coverage, while the majority of that same premium is invested in the stock markets. Because some of the premiums are continuously invested over time into capital markets, the return potential is much greater than with other investment options.

There are various types of Unit Linked Insurance Plans in India that cater to various financial objectives and risk profiles. The different types of ULIP could generally be categorized either according to the form of funds wherein your premium is invested or according to their ability to produce wealth. Some of the most sought after forms of ULIP investments available in India are explained briefly below.

ULIPs centered on the type of funds

Equity

Here, money from investors is used to buy equity shares in one or more businesses. Equity investments are far more volatile since they are directly related to stock market volatility. The growth potential, though, is also greater. This makes ULIPs perfect for risk-friendly investors with a strong risk appetite for equity investments.

Debt

The funds are equally invested in debt instruments such as debentures, government bonds and shares, and fixed income bonds under these types of Unit Related Insurance Policies. Although these instruments bear medium to low risk, they are also only moderate in terms of returns.

Liquid Funds

These forms of ULIP plans park investors' funds in highly liquid money market instruments such as treasury bills, call money, and deposit certificates, suitable for meeting short-term financial objectives (CD). The maturity period for these funds is comparatively shorter and, unlike other ULIPs, typically ranges from a few weeks to months. Many of these types of ULIP investments come with high credit scores for people with a low-risk profile, making them a safe investment choice.

Balanced Funds

Some ULIPs invest in a combination of both equity and debt instruments to lower the risk factor. The risk is essentially distributed between high-risk and low-risk investment options by allocating one portion of the funds to equity and the other to fixed-income debt instruments. As a result, balanced funds' returns are more stable and much less volatile than those earned from pure equity funds.

Cash Funds

Some Unit Linked Insurance Plans steer their funds into investments with very low-risk cash funds, such as term deposits, deposit accounts, and market funds. Although the returns provided by these kinds of ULIPs are the lowest among all the other choices available, the risk factor is also negligible. For investors who are extremely risk-averse and want to reduce it as much as possible, this makes them an excellent option.

ULIPs Based On Wealth Creation

Unit Linked Insurance Plans are also categorized according to their wealth creation potential. These strategies are primarily formulated to optimize the return on investment. Some of the various types of ULIP plans that concentrate on wealth development is described and discussed below.

Single premium and regular premium ULIPs

A single premium ULIP package only needs a one-time premium payment due at the time of purchase. On the other hand, throughout the policy, a daily premium ULIP allows you to pay premiums annually, right from purchase until maturity. You may opt to pay the premiums monthly, quarterly, semi-annual, or annual instalments depending upon your financial circumstances.

Life Staged ULIPs

These types of Unit Linked Insurance Plans work under the premise that, as they get older, investors' risk-taking capacity decreases. These strategies, therefore, invest half of the premiums in fair value and a portion of the remaining premium in debt instruments, respectively. Initially, rather than debt, a greater proportion of investment goes into equity.

These forms of ULIPs, as the investor ages, steadily increase the proportion of investment in debt instruments and reduce the proportion of equity investment. This effectively emphasizes stable investment returns and wealth preservation by reducing the risk and uncertainty of returns.

Guaranteed And Non-Guaranteed ULIPs

Wealth protection has been the primary goal of guaranteed ULIPs. By investing only a small fraction of your premium in equity, these types of ULIP limit your exposure to market risk. Guaranteed ULIPs are optimal choices over a longer period for individuals searching for safe returns. Non-guaranteed ULIPs, on the other hand, concentrate on optimizing wealth creation by allowing you to spend a higher percentage of your premium in stock markets. The returns that are provided by non-guaranteed ULIPs are greater but more unpredictable.

Benefits With ULIPs

ULIP's benefits derive from the versatility it provides investors with. ULIP tax benefits also boost its reputation with people looking to save on taxes and build a broader corpus, both in the long-term and short-term, to achieve their potential objectives. Available from Canara HSBC Oriental Bank of Commerce Life Insurance, the Invest 4G Plan provides customers with tremendous flexibility through flexible plans that allow them to select the benefits best tailored to their needs.

Read on to learn more about the benefits of ULIPs that policyholders have:

Death Benefit

The death advantage, which is available to dependents after the policyholder's death, is among the key advantages of opting for a ULIP. The death benefit guarantees that the policyholder's dependents have access to financial stability and, even in the policyholder's absence, can continue their daily lifestyle.

Meeting Financial Goals

The establishment of a corpus is expected both for short-term and long-term economic targets. Policyholders may aim to greatly broaden their corpus and achieve these targets with a ULIP. For example, with education costs rising by the day, even when the individual is quite young, a ULIP can be set up to begin building a corpus to meet the child's higher education goals. ULIP's advantages may also be applied to savings for short-term purposes, such as taking a family holiday far away to an exotic spot.

Income Tax Benefits

When choosing investment instruments, income tax benefits are considered, and ULIP tax benefits make it the primary option for such investors. Both Section 80C and Section 10(10D) provide tax benefits on ULIPs under the Income Tax Act. At the time of individuals paying premiums, on the withdrawal of returns from the investment and at the time of maturity of the fund, ULIP tax benefits come into play.

Flexibility

All individuals looking to protect their financial wellbeing and ensure long-term financial success, savings and insurance are two financial pillars. As a consequence, for such individuals, ULIPs serve as the ideal instrument. When investing in ULIPs, the insurance cover is protected by a part of the premium charged, while the remainder is invested in investment instruments. By letting policyholders decide how much of the investment should ensure themselves and how much of it should go towards building their corpus, ULIPs guarantee flexibility. Based on their particular requirements, investors may determine the proportions of the instrument in which they wish to invest.

Savings

Individuals can inculcate the disciplined habit of saving regularly by investing in a ULIP, which can prove tremendously beneficial throughout their lives. Saving regularly ensures that there is still financial capital to fall back on during times of financial emergencies.

These classifications help to illustrate that you can select a ULIP method that suits your risk appetite and your overall financial objectives. Invest in the Invest 4G ULIP at Canara HSBC Oriental Bank of Commerce Life Insurance, which gives you the option to choose from 7 different funds with risk and reward equations that vary. The strategy also allows you to switch between various fund options and redirect your assets, so you can adapt to your evolving risk appetite and take advantage of fluctuations in the market.

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Frequently Asked Questions

What is saving plan?

A savings plan is likely to be different for everyone depending on the financial goal, risk profile, returns, and investment horizon. If you are young and want to save for your retirement, ULIPs like Invest 4G or Titanium Plus plan would be the best option. You are likely to create a large corpus by your retirement through market-linked returns if you invest in this savings plan. If capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

Who should invest in a Savings Plan?

If you are looking for a guaranteed income plan, then saving plans should be on your list of investments that you are planning to make. Savings plan require you to invest a pre-decided amount on a regular basis. People with a regular stream of income who require a lump-sum amount after a period should opt for a savings plan. Working professionals, self-employed people and businessmen should consider a savings plan to meet their long-term financial obligations. Saving plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These saving plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

How much money should you put in savings each month?

The amount that should be invested in a savings plan each month depends on the income, existing financial obligations and the long-term financial goal. If you have a steady income, you should save at least 20% of your monthly income. It is not necessary to invest your entire money into a savings scheme as investments should be diversified. Ideally, you should aim to have a financial buffer of over 10 times of your annual income. Choose an income plan based on your financial circumstances to stay afloat.

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What is the difference between saving and investing?

Saving is the money that you keep aside for emergencies or for buying any big-ticket item. Investing means growing or multiplying the wealth that you have by buying savings plan, or any other assets. Buying a savings plan will help you in achieving your investment goals such as retirement, your child’s higher education or marriage, or for buying a new house.

Which savings plan is best for retirement?

The Invest 4G plan with its multiple investment options and various portfolio management strategies for capital protection is an ideal saving plan for retirement. Also, Guaranteed Income4Life is also another savings plan that you can consider for building your retirement corpus as it acts as a guaranteed income plan that will provide you maturity benefits to manage your post-retirement expenses.

Which savings plan is best for long-term goals?

Smart Goals Plan is a savings plan with its unique features such as modification of the sum assured partial withdrawal and fund switch can help you plan for your long-term financial goals. Canara HSBC Oriental Bank of Commerce Life Insurance offers a wide variety of saving plans that you can invest in as per your risk appetite and investment goal.

Which savings plan is suitable for girl child?

The Future Smart unit-linked plan from Canara HSBC Oriental Bank of Commerce Life Insurance is the ideal savings plan for the girl child. Monthly Income Advantage Plans are also a good option if you are planning to invest in a savings plan for your girl child.

Where should I invest my money?

You should spread your investments across financial instruments. However, having the best savings cum guaranteed income plan in your portfolio is extremely important. Savings plan ensures financial stability and also helps in fulfilling short, medium and long-term monetary goals.

What is a monthly income advantage plan?

A monthly income advantage plan ensures that you lead a stress-free life with your loved ones as it provides a life cover along with giving you guaranteed monthly income. In short, it is a life insurance and income plan that will financially secure commitments made to your loved ones. Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Income Advantage Plan is a monthly income advantage plan that provides life cover for the entire term while you pay premium only for a limited period.

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What is a good age to start saving money?

When you plan to invest in a financial product, it always pays well to start early. The earlier you start saving and investing, the better. When you start investing early, the capital gets adequate time multiply. Even a small amount invested for a long time can give substantial returns due to compounding in a savings plan. Invest in an income plan as early as possible to build a significant corpus that will later help you in life. Ensure that you buy the best saving plan in India that can be aligned with your investment goals.

Should you use a savings plan for retirement planning?

Yes. Retirement planning is one of the most important financial decisions of our lives. The best saving plan offers a host of features that may help you build your retirement corpus. Some of the saving plans like Guaranteed Income4Life offer guaranteed returns at policy maturity. Such returns can act as a regular income stream even after your retirement to help you stay financially stable.

Are saving plans beneficial for managing unexpected expenses?

Yes. Best saving plans in India offer partial withdrawal system that can be utilized during your rainy days. Being financially prepared to tackle such odds will help you manage any unforeseen expenses in a smooth manner. Buy a monthly income advantage plan that will generate a steady source of income for you to take care of both long-term and short-term financial goals.

How to save tax by using savings plan?

Saving plans are known for helping us achieve our financial goals. Best saving plans allow you to grow your wealth while providing life cover. Saving and investment plans are also beneficial for tax planning. Premiums of savings cum protection plans come with tax benefit under Section 80C of the Income Tax Act. Moreover, proceeds received upon the death of the policyholder or upon the maturity of the policy are tax free under Section 10 10(D).

What is the right age to start saving money?

When you plan to invest in an income plan, it always pays well to start early. The earlier you start investing in a savings plan, the better. When you start investing early, the appreciation in capital is significant. Even a small amount invested in the best saving scheme for a long time can give substantial returns due to compounding. Buy the best savings plan as soon as you start earning to achieve all your milestones on time.

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How a savings plan can help in building your child’s education fund?

Saving plans help in building wealth over time against the investments that you make. Buy the best savings plan to build an education fund for your child. The best saving plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance eases the stress of planning your child's future by providing a lump-sum payout on the investment. Consider investing in a monthly income advantage plan to assist you in fulfilling your financial goals.

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How Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance can help you?

Every person has a unique reason to save and invest. With ULIP savings schemes, the company caters to people seeking wealth creation through capital appreciation. Contrarily, the traditional plans can help you save for important life goals without worrying about the fluctuation in fund value. All major savings plan offers partial withdrawal facility that can help you take care of unplanned contingencies. With savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, you get adequate flexibility while investing and receiving the savings benefits, which makes them a good investment choice for investors looking for income plans.

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