People normally see life insurance plans entirely as financial security measures to protect loved ones who survive the insured person after death. Some life insurance plans deliver more than death benefit coverage because they provide policyholders with a way to build assets.
Through investment-linked insurance products, policyholders gain wealth accumulation benefits in addition to maintaining their financial security. Let us review the ways life insurance through Unit-Linked Insurance Plans (ULIPs) supports retirement policies to grow financial assets.
1. Unit-Linked Insurance Plans (ULIPs) – Investment & Protection in One
Insurance policies based on Unit-Linked Investments (ULIPs) integrate both death coverage and market-oriented investment aspects. The portion of your premium payment covers your life cover, but the remainder is invested through equity or debt or balanced funds according to your risk tolerance.
How ULIPs Help in Wealth Creation:
- Your wealth has the potential to expand through market-linked investments when you choose equity or debt funds as your investment options, subject to market performance.
- The payment of insurance premiums qualifies for tax deductions under applicable tax legislation, while maturity benefits remain tax-free only for policies where the total annual premium does not exceed ₹2.5 lakh.
- The feature of fund switching allows policyholders to modify their financial investments based on shifting life goals.
- ULIPs serve as an excellent solution for people building extended-term wealth through long-term investments that provide both financial security for their family and future goals.
2. Retirement-Focused Life Insurance Plans
Insurer-provided retirement plans generate dependable retirement payouts with dual benefits of protecting dependents via financial support. These plans enable participants to build a corpus throughout their professional lives and eventually convert it into a pension program.
How Retirement Plans Help in Wealth Creation:
- A retirement strategy through insurers enables individuals to generate steady financial payments when they retire.
- Investments under this plan grow over time, helping to build a sufficient retirement corpus, though returns are generally moderate and designed for stability rather than exponential growth.
- Such plans protect family members monetarily in case of the policyholder’s demise.
- This saving option benefits people who need to build retirement funds in a disciplined manner for future financial security.
3. Endowment Plans – Insurance Protection with Savings
Endowment plans provide twin advantages—life insurance and a lump sum payment at maturity. They function as disciplined savings instruments while providing financial security to beneficiaries.
How Endowment Plans Assist in Wealth Generation:
- Fixed Returns: Guaranteed maturity proceeds assist in goal-based savings.
- Low-Risk Option: In contrast to market-linked plans, endowment plans offer predictable returns.
- Bonus Additions: Periodic bonuses are provided by some plans, increasing overall payments.
Endowment plans are ideal for individuals who want guaranteed savings with insurance coverage.
A life insurance plan is not all about protection—it can be a key wealth-building tool, too. Depending on whether you opt for a ULIP to save on the market, a retirement plan to secure your finances after retirement, or an endowment plan to save responsibly, the right life insurance plans can get you the long-term financial security you need. By investing in a well-planned scheme, you can secure both wealth-building and future financial security.
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