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6 Key factors to consider before buying insurance investment plans

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In your life, you might have faced lots of instances where you were not sure about the decision taken by you is a right one or not? Such embarrassing moment do comes in everyone life. Luckily, investment on insurance investment plans is free of such situations. For buying an insurance investment plan through mutual funds, you only need to do some research for the product as per your requirement. Investment in long term instrument like insurance is a must in any financial portfolio because it covers the risk associated with the loss of property or loss. Although, it is a contract for 10 years or more, therefore it is quite difficult for an investor to amend the contracts during the policy term.

For an investor, here are some key points which a buyer must consider before buying insurance based investment plans.

Do you really need an insurance plan:- If you’re living in a misconception that life insurance is mandatory for every individual then you’re totally wrong. Insurance plan is a must in portfolio of family person but for a single or an independent person living on his income, such policies are not compulsory applicable.

Decide type of cover you actually require:- For an individual, there are wide range of covers available varying from simplest Term plan to a more complex ULIP. You need to decide which policy will meet your requirement from available options. Firstly, you should be clear about the duration or period you need insurance protection as it will help you to judge the right policy for a specific term.

Decide amount of cover you require:- For deciding the amount of cover in a policy, you must consider the purpose of your insurance. Your life insurance plan should be strong enough to cover for all possible expense your family may have. This will support your family after your death (if it happen) and will also release them from financial burden. However, ideally a person is recommended to buy a life cover of 8 to 10 times his annual income in order to get good return after the maturity of insurance policy.

Check your affordability:- Your plan for investment on insurance policy completely depends on your affordability limit to pay those premiums. However, if you’re choosing some added investment cover or whole life cover, you must buy a term plan to get safely insured. Different insurance company’s charges different rates for the policy cover but if you want the cheapest quotes, you should do your research well for the policy where you want to invest.

Choose the company for investment:- As an investor, you must do your homework before buying the policy. You have the complete authority to ask them about the claim settlement ratio which they offer to the policyholder. You should not buy insurance from a company that cannot pay your claim.

Thoroughly understand your policy:- After finalizing your financial instrument ensure to read the terms and conditions described for an investor. For this, you can seek the help of a professional financial advisor as he will clear you all terms associate with the policy and will guide you to consider include and exclude as well as rating of the policy.

These are the major key factors which will help you to decide the best insurance plan and will keep your family secure financially after the successful completion of policy.




Mr. Ajay Kumar Jain, M.Sc, Chairman And Managing Director
Being the Chairman And Managing Director, he focuses on holistic investment planning and wealth management and tries to make investment planning simpler for retail and HNI investors. Investor education is one of the prime things that Mr. Ajay Jain focuses on as he believes financial education is the foundation of successful investing. With over two decades of experience, Mr. Jain has made a mark in the Indian mutual fund industry due to his compassion and sheer hard work.

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