With financial markets evolving rapidly, many investors are asking whether insurance savings plans remain a good option. These plans, such as endowments, money-back policies, Unit-Linked Insurance Plans (ULIPs) and guaranteed return insurance products, combine life cover with savings or investment. But, the question comes up: Is Insurance less competitive now compared with other financial products?
How is an Insurance Savings plan different from regular saving methods?
“Savings plans are different from regular bank savings accounts because they combine savings with protection. One important feature is the life insurance cover that comes with the plan. This means if something unfortunate happens to you during the policy term, the insurance company pays a financial amount to your family, ensuring their financial security. Savings plans protect individuals with some guaranteed benefits which enable their investments to expand. You can also enjoy tax benefits under Indian tax laws when you invest in these plans, which make them an attractive investment option,” says Sabyasachi Sarkar, MD & CEO of Go Digit Life Insurance.
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“In today’s uncertain financial landscape, savings plans offer more than just a way to set money aside. They provide a structured path to long-term security and peace of mind. These plans work through compounding, which allows your invested funds to grow continuously until they reach a predetermined return in the future. People can transform their investment into substantial wealth through a well-planned savings approach,” Sarkar said.
“The plans become more valuable because they also include life insurance coverage. These financial instruments provide two advantages, which make them serve as complete financial tools that help you accumulate wealth and safeguard your family members from unexpected shocks. It’s a thoughtful way to ensure that your financial goals are met, while also safeguarding your family’s future,” he continued.
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As Sarkar put it, there are different types of Insurance Savings plans available in the market currently designed to meet different needs:
Endowment Plans: You get a lump sum amount at the end of the term along with life insurance coverage. Another variation in these plans is a whole life plan where lifelong coverage for up to 100 years is offered.
Money-Back Plans: You receive partial payouts at regular intervals during the policy term, which helps meet ongoing expenses.
Retirement Plans: These plans give you regular income after retirement to support your living expenses.
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However, it must be kept in mind that insurance savings plans can work, but they’re not the default answer for everyone in the current investment environment. For someone needing both cover and long-term savings, they may offer simplicity and discipline. But if you already have adequate protection cover and seek high growth or flexibility, using separate products (term insurance + mutual funds/SIPs) may make more sense.
Given the fast-moving market and changing regulatory landscape, scrutinising the product, being clear on features and fees, and keeping all other market conditions in mind is the best bet.
{News Ei Samay does not provide investment advice anywhere. Investment and trading in the share market or any field involves risk. Proper study and expert advice are recommended beforehand. This news is published for educational and awareness purposes.}
