A common confusion between the two arises when someone is planning their retirement. So, what should you select between insurance and investment? Let us have a look
Benefits of Life InsuranceLife insurance plans have an assured sum which is paid to the policy nominee if you pass away during the policy term. If you survive, there is generally some type of maturity benefit in some plans. Many plans also come with valuable riders such as critical illness, death due to accident, etc.A significant benefit of life insurance over investment is the fact that the death benefit will be paid to your nominee irrespective of when you die during the policy tenure. So, if you have a Rs. 1 crore cover and pass away within five years of purchasing the policy, your nominee will receive the coverage.
Investment AdvantagesThere are now several retirement investment options such as unit-linked pension plans, mutual funds, and more to suit every type of investor. It is seen that people who invest in such options from an early age can create a large corpus by the time they reach their retirement age. So, your age plays a significant role in the process.As compared to the maturity benefit of life insurance that you can receive if you survive the policy duration, the returns from these investment options can be considerably higher if you remain invested for 15-25 years.
Selecting Between the TwoAs you can see, both investment and insurance have their benefits. The selection between the two mostly depends on what you are looking for. It is generally recommended that rather than selecting one of the two, you should invest in both for added safety. In fact, there are now life insurance investment plans that combine the two.
A strong portfolio is one that helps your assets grow while keeping you protected at all times.With these plans, your premium is divided into two parts- one part is reserved for life insurance, and the other is invested in a mix of debt fund and equity fund of your choice. So, such plans can deliver considerable returns over time while also providing the safety net of life insurance. You can consider a financial service provider that offers life insurance as well as investment options to get professional help for making the right decision.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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