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The Best Investment Plans In India That Give High Returns

dateKnowledge Centre Team dateJanuary 22, 2021 views112 Views
The Best Investment Plans In India That Give High Returns

In this day and age, where new financial burdens crop up on a daily basis, every single decision we make will have an impact on the future of our family. With rising inflation rates, increasing costs for education, and the absurd levels of unemployment amongst India's educated youth, securing the future in a foolproof manner with nothing left is something we cannot leave up to chance.

Along with these new waves of problems, insurance companies and banks have also adapted their plans to fit a modern citizen's needs. Gone are the days when we had limited options and had to make the hard choice between either insurance or savings. In India, several hybrid investment plans offer high returns and additional advantages like death benefits covering various coverages for unprecedented deaths. These also allow you to submit a higher tax deduction rate. These hybrid investment plans are called ULIPS or Unit Linked Insurance Plans.

What are Unit Linked Insurance Plans?

ULIPS are hybrid investment plans that have characteristics of both life insurance and investment plans. Like most insurance plans available in India right now, Unit Linked Insurance Plans offer life coverage with the added benefit of the investment. However, as the bank would tell you beforehand, the choice of investing in available fund options is entirely up to the policyholder - this implies that the risk of investment is completely on the person in whose name the policy is taken, not on the bank.

ULIPS are inherently more profitable than an ordinary insurance policy, and these higher returns come with the risk. Most people prefer to keep their insurance and investment separate. Still, anyone who has experienced the advantages of ULIP can tell you that they are infinitely better than the myriad of investment plans in India.

Here are some features of a ULIP:

1. Capital Protection

Whatever sum is assured as you sign up for the policy is guaranteed according to the terms and conditions, provided that you pay the premiums regularly without the termination of the policy. This is a significant capital protection. Once you outlive the policy's maturity date, you will receive the entire assured sum without being affected by inflation rates. Life insurance is a fixed-cover product and will not give you profits, but the policy's investment element will. Therefore, the equity fund has the potential to help you beat inflation and accrue a good amount of wealth while having your life insured.

profits, but the policy's investment element will. Therefore, the equity fund has the potential to help you beat inflation and accrue a good amount of wealth while having your life insured.

2. Guarantees

The death benefit or the sum assured is a fixed sum of money that will be returned to you no matter what, provided you meet all the terms and conditions and no premiums have been missed. However, the investment portion does not guarantee complete returns since it is market-linked - but it may also give you higher returns than you initially thought.

3. Liquidity

In the case of ULIPS, you will have to wait for a lock-in period of five years (usually) before you achieve liquidity, which implies that you will be eligible for redeeming units in which the premiums are invested in, premature withdrawal, or even a surrendering of the policy at a loss. You have the option to go for a loan at special rates, especially if the ULIP you go for is a plan like the Invest 4G Plan, offered by the Canara HSBC Oriental Bank Of Commerce.

Invest 4G Plan

Canara HSBC Oriental Bank of Commerce Life Insurance Invest 4G Plan is arguably one of India's best investment plans today. The high customizability and innovation behind the Invest 4G plan's design make it perfect for the modern citizen who wants extra protection in today's age of uncertainty. With an unbeatable combination of portfolio management options, savings, and insurance, this plan takes care of all your financial concerns for the future in one go.

Let us look at the benefits that set the Invest 4G Plan apart from India's other investment plans.

Advantages of the Canara HSBC Oriental Bank of Commerce Life Insurance Invest 4G Plan:

  • You can choose to pay for the entire policy term, a limited number of years, or even just once. This makes the plan suitable for customers from all financial backgrounds and with varying levels of urgency to take a savings/insurance/investment plan.
  • Whatever mortality charges are deducted during the tenure of Regular and Limited Premium paying options will be added to the fund value when the policy matures.
  • You have three cover options suited for different life stages - the Life Option, the Care option, and the Century Option.

Life Option

This simple option gives you live coverage and higher sum assured or the fund value, depending on the partial/systematic/milestone withdrawals that have been completed, and subject to 105% of all premiums that have been paid. This is payable on the death of the person who has been Life Assured. If the person survives till maturity, the insurer will pay the fund value, and the policy will terminate.

Care Option

Ideal for families, this allows you to save up and provide your family with the Premium Funding benefit, along with life coverage. The lump-sum is paid after the Life Assured death, and the remaining future premiums, if and when due, will be completely paid by the company.

Century Option

This is a classic 99-year term policy that will cover you until the age of a hundred, as well as help you leave a legacy for your family. You have the option to claim the higher of the sum assured or the fund value, subject to 105% of all premiums paid, upon the death of the life-assured. If the assured survives till the age of 100, the fund value will be paid in full, and the policy will terminate.

  • The Premium Funding Benefit is available under the Care Option.
  • The plan also offers Loyalty Additions and Wealth Boosters during the policy term. This will provide a boost in your investments through the additional allocation of units.
Unit Linked Fund Loyalty Addition Percentage
Emerging Leaders Equity Fund, India Multi Cap Equity Fund, Equity II Fund, Growth Plus Fund, Debt Fund & Liquid Fund 0.50%
Large Cap Advantage Fund, Debt Fund & Liquid Fund 0.25%
  • The option for systematic withdrawal through which you can create additional income streams during the policy tenure - implying that once a certain limit of premium payment has been reached, you can systematically withdraw specific amounts of money before the term is completed, allowing you to reap the benefits of the plan before its completion.
  • There is also the option for Milestone Withdrawal, which provides for enhanced liquidity at regular milestones, about which you can enquire with the bank.
  • There are multiple portfolio management options from which you can choose, which helps you optimise your policy's returns based on your preferred investment manner. The following are the portfolio management options available to all policyholders:

1. Systematic Transfer Option

2. Return Protector Option

3. Auto Funds Rebalancing

4. Safety Switch Option

  • There are also eight different Unit Linked Funds with varying risk appetites that you can go for - along with the portfolio management options; the right combination can help you maximise your profits:

1. Emerging Leaders Equity Fund

2. India Multi-Cap Equity Fund

3. Growth Plus Fund

4. Equity II Fund

5. Balanced Plus Fund

6. Large Cap Advantage Fund

7. Debt Fund

8. Liquid Fund

  • In addition to all these benefits, you will also be able to save up on tax up to Rs. 1.5 Lakhs. The partial withdrawals made as a part of this plan is completely tax-free as well.

One of India's best investment plans available right now is the Guaranteed Savings Plan offered by the Canara HSBC Oriental Bank of Commerce Life Insurance. It offers a complete guarantee of benefits as well as the flexibility to choose your savings horizons. These plans are designed to combat every disadvantage that a Unit Linked Insurance Plan does.

Advantages of the Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Savings Plan:

  • Guaranteed benefits on maturity - provided no premiums have been missed.
  • Pay premiums for a limited period, but enjoy life coverage for the entire term.
  • Extra protection for your family

Even in the case of an unprecedented death, there will be a life insurance protection provided to your family through a lump sum benefit. This is available under the option of Guaranteed Savings with Premium Protection and can be availed even if there are unpaid premiums at the time of your demise.

High flexibility and customisation

The Canara HSBC Oriental Bank of Commerce Life Insurance offers a guaranteed savings plan tailored to fit your every need - primarily because you can tailor them yourself. Customise the policy term with multiple options available for premium amount and coverage, so that you can make a custom plan that suits your financial capacity at the moment.

High Premium Booster

The added benefit of a high premium booster allows you to enjoy extra returns if you make a higher premium commitment.

Tax Deductions on the premium paid and the benefits received (Under Section 80C and Section 10 (10D).

For further details about the plan, please check below:



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TERM Insurance PLAN

TERM Insurance PLAN

Whole life cover option available

Increase your life cover with changing life stages

Return of premium & in-built protection options

Multiple premium payment options

Avail tax benefits on premiums paid as per tax laws

ULIP PLAN

Unit Linked Insurance Plan

8 funds and 4 portfolio strategies to invest

Loyalty additions and wealth booster

Return of Mortality Charge is available on Maturity under all three cover Options

Flexibility of switching between the fund options to take benefits of market movements or change in risk preference

Pos Easy Bima Plan

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Hassle free

Get double life cover in case of accidental death

Choice of flexible premium payment and policy term

Avail tax benefit on premium paid

FAQs

In order to understand ULIP NAV, you first need to understand how ULIPs work. In ULIPs, a portion of premium from different investors is accumulated to create one investment corpus. This money is invested in several different market instruments. So to divide the returns properly among all the investors, the fund manager divides the net asset value in to small units with a specific face value. NAV is the per market share value of a fund. To better understand the definition of NAV, take a look at the formula below -

Net Asset Value = [Assets-(Liabilities + Expenses)] / Outstanding Units

It's not risky to invest in ULIP if you chose a safer path. Risk factor in ULIPs depends on the investment option you choose. If you are not okay with sharp movements, then choosing a low risk investment is a better idea. For people with high risk appetite, it's good to choose equity funds while risk-averse investors can go for debt funds.

You can opt for settlement option if you want to take your fund value in periodic installments. With the settlement option, you can get your maturity amount in installment as per the frequency chosen by you over a maximum period of 5 years. You can choose complete withdrawal of fund value at any point of time. Although, you will not get any life cover during this period.

ULIPs are life insurance products that provide paths to invest. And just like other investment option, there's no guaranteed investment return in a ULIP. Although, if you like taking risks and want to earn more returns on your investment, then opt for equity funds.

At the time of maturity of ULIP policy, you will get the fund value on your prevailing NAV. Fund value is the number of units of policy multiplied by NAV (net asset value).

Value of the fund = Total units of policy x NAV (Net Asset Value)

Well, discontinuing your premium payment will disrupt your savings as well as financial goals. In such case, you can approach your insurance company and ask for the revival of discontinued policy within the stipulated timelines. Also, you will have to pay all the unpaid premiums.

ULIP plan is a combination of investment and insurance. Thus, one must hold this plan for a duration of at least 10 years so as to get investment benefits out of it. As an early exit will have its own consequences. ULIPs have a lock-in-period of 5 years. Thus, you may surrender your policy before the completion of 5 years, but you will be paid only after the end of 5 years.

Generally, minimum lock-in period for ULIP is 5 consecutive policy years. During this time period, if the policyholder discontinues or surrenders the policy, then he/she will not able to receive any payouts. Withdrawals are only allowed at the end of the lock-in period. In addition to this, if you surrender your policy before the lock-in period ends, then you will have to pay surrender charges as well. Also, it is advisable not to exit your plan after the completion of 5 years of lock-in period, because if you stay invested for a longer duration it will help you reap better benefits.

The amount that you pay towards the Unit Linked Insurance Policy is eligible for tax deduction as per Section 80C of the Income Tax Act, 1961. This means that the premium amount paid will be deducted under section 80C from your taxable income up to a maximum limit, which is currently ₹1.5 Lakhs. However, the aggregate amount of deductions under section 80C, section 80CCC and 80CCD (1) shall not, in any case, exceed ₹1.5 Lakhs. Also, upon the maturity of the policy, the payout amount you receive will be exempt from income tax, subject to the applicable provisions of Section 10(10D) of the Income Tax Act, 1961.

Here’re the following major benefits of buying ULIP

1. Tax Benefits – It helps you to reduce tax liabilities. This means you are liable to enjoy tax benefits on the premiums paid towards the policy as per Section 80C of the Income Tax Act.

2. Long-term growth– One of the major benefits of buying a ULIP plan is that it offers long-term benefits. ULIPs come with a lock-in period of 5 years which will keep you invested for a longer period.

3. Dual benefits – ULIPs not only offer life coverage but also come with a wide range of investment funds that will help you earn great returns. This includes balanced funds, debt funds or equity funds. You can invest in any of them depending on your need and risk appetite.

4. Flexibility – It gives you the flexibility to switch between funds basis your risk appetite. You could select multiple funds and different investment strategies.

5. Partial withdrawal option – It allows you to make partial withdrawal in case of any uncalled medical emergency or contingency after completion of lock-in period.

ULIP is a perfect investment option if you are looking for long term wealth creation. It could be buying your own house, a new car, going on a long vacation, or your child’s higher education or marriage, ULIP helps you to meet all your long-term financial goals. Moreover, it comes with a lock-in period of 5 years which keep you invested for a longer period and helps you earn better returns. The lock-in period is calculated from the date when the policy is issued.

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