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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 (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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