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How to Make your Insurance Plan an Investment?

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How to make Insurance plan an investment
February 10, 2024

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Here's how

Investing helps you build wealth and a strong financial future. The corpus amount helps meet retirement goals and also acts as contingency during emergencies.

There are numerous investment options available in the market. Some of the most popular investment vehicles include fixed deposits, stocks and equities, post office savings schemes, debt instruments, pension plans and commodities, besides many others. These instruments offer varied rate of returns and are associated with varying degrees of risk. Bank deposits, for example, are best-suited for risk-averse individuals seeking a fixed return. High-risk individuals may invest in equities and stock markets. They stand a higher chance to reap attractive returns if the market performs well. Post office savings schemes are suitable for those seeking investing in a safe and secure avenue and who wish to earn substantial returns. You may, therefore, analyze various options and choose the one that best suits your needs.

Understanding how investment process works

In most investment products, such as mutual funds, a certain sum is given to a financial organization for the purchase of an asset. You are then eligible to receive regular payment, either through interest or dividend. You may also withdraw the investment in future at a higher value and make high profits.

Understanding how insurance process works

Insurance policies provide the benefit of coverage in case of unfortunate events such as death, disabilities, or diseases. Both term insurance and whole life coverage requires you to make regular premium payment over a period. In case any event covered under the policy occurs, the insurance provider is liable to pay either part or full sum assured. Most types of insurance plans, including endowment policies and life insurance, work in such a manner.

Making your insurance plan an investment

Investment means putting money, time, as well as efforts into something for financial benefits.By investing in an insurance plan, you may get the advantage of life coverage and protection during unexpected events, such as diseases, disability, or death.

Let's understand this with an example Mr. Kumar, a 25-year old graduate is currently employed at a private firm. He earns INR 40,000 per month and invests INR 4,000 every month. Using an insurance calculator, it is found that Mr. Kumar will accumulate INR 9,43,420 over a period of 10 years (assuming that the interest is compounded annually at the rate of 12% p.a.). However, in case an unfortunate event occurs during this 10-year period, Mr. Kumar will not have accumulated enough amount to support himself or his family. He will not have adequate money to cover his treatment costs and other financial obligations. An insurance plan, however, would help him meet the cost of treatment and other expenses.

It is, therefore, recommended to invest a certain sum of your income in an insurance policy. You may compare various plans of insurance in India and make a choice based on your needs and financial position. Doing so will provide you with adequate coverage in case of unfortunate events such as illnesses, disabilities, and death. Moreover, knowing that you are covered at all times will also give peace of mind.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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