Language

Call us

/content/dam/tataaialifeinsurancecompanylimited/navigations/new-call-us/Close.png

starFOR EXISTING POLICY

Have query on premium, payout or any servicing need?

Dedicated NRI Helpdesk:

Call Icon +91 22 6251 9966

Monday - Saturday | 10 am - 7 pm IST
Call charges apply

Plus IconFOR NEW POLICY

Want to buy a new policy online?

For Indian Residents

Call Icon +91 22 6984 9300

Give missed call for a call back:

Call Icon +91 11 6615 8748

Monday - Sunday | 8 am - 11 pm IST

Exclusively for NRIs

Initiate Internet Call

Data charges may apply

Give missed call for a call back:

call +91 11 4473 0242

Available All Days | 24 x 7

Back Arrow Icon
Close Button
Back Arrow Icon
Close Button

Need assistance in choosing the right insurance plan? Get a call from our Expert.

Need assistance in choosing the right insurance plan?Get a call from our Expert.

+91 dropdown arrow

Select Plan dropdown arrow
  • Term plans
  • Saving plans
  • Wealth plans
  • Retirement plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in. T&C apply.

What are Financial Assets?

Financial assets are intangible assets that are more liquid than other types of assets. The value of financial assets is derived from the contractual claim of what they actually represent. Some examples include cash and its equivalents, bonds, shares, etc.

Investment plans are essential to ensure that your money appreciates over time. There are many different types of assets that you can invest in. One of the assets that you can invest in is financial assets. Financial assets are the types of assets whose worth is derived from the contractual claim of what they actually represent.
 

There are many different types of financial assets that you can invest in. Some of these assets include bonds, shares, debentures, fixed deposits, cash and its equivalents, etc. You can choose financial assets as per your investment needs. An investment plan ensures that you invest in the right assets which enable you to fulfil your future financial requirements. 
 

Read on to find more information about the financial asset meaning.

What are Financial Assets?

Let us understand the financial assets definition. Financial assets are a type of financial assets that are intangible in nature. These assets are more liquid than other kinds of assets. The worth of these assets is determined by their contractual claims. 
 

They can be converted to cash quickly. Here, two parties are liable to enter into a contract under some financial assets in which one party (the investor) receives a financial benefit from the amount which they have invested in the second party. Some financial asset types include stocks, debentures, fixed deposits, etc.

Types of Financial Assets

Now that you know the financial asset definition, here is the list of the types of financial assets:
 

  • Cash and its Equivalents

    This type of financial asset includes cash, money in your bank account, as well as cheques. These are financial assets that are highly liquid in nature and can be easily converted to cash. These can generate income in the short term. Some of the other cash equivalents include marketable securities, money market funds2, etc.

  • Fixed Deposits

    These are a sum of money that has been deposited with a financial institution like a bank, cooperative, or post office. It is one of the top ways for people to keep their money safe while earning an interest on it. The interest percentage might be different according to the institution that you choose. 

  • Equity Shares

    When you invest in equity shares of any company, it means that you are the owner of a part of that company. With equity shares, you will get the right to earn dividends, the right to vote, get capital appreciation on the shares that you are holding, etc. 
     

    By investing in equity shares, you have to bear the profits as well as losses of the company. These can be risky financial investments, so it is advisable to consult a specialist or have at least some knowledge of the market before investing.

  • Mutual Funds

    In these financial assets, money is collected from a group of investors, and the collected money is then invested in financial markets. These markets include commodity, debt, and equity markets. You are allotted units as per the amount that you have invested. 
     

    The allotted units are sold and purchased in the markets as per the market price. The ROI that you get on this investment is the sum of the capital appreciation amount and the income generated on the principal invested amount minus a few charges. However, if the unit value falls, you will have to incur some losses. 

  • Debentures

    These are shares that have been issued by a company so that they could raise money as debt for their long-term and short-term obligations. The investors are paid interest on the amount that they have invested, and on maturity, the principal amount is also returned to the investor. 
     

    Unlike the payment of dividends in regard to equity shares, the interest on debentures is paid even if the company has incurred any losses. In the case of the liquidation of the company, the preference is given to debenture holders over equity shareholders and preference shareholders.

Classification of Financial Assets

There is no specific classification that can apply to all these assets. But, broadly, these can be categorised into two categories:
 

  • Current Assets

    These are the types of financial assets that are short-term and are highly liquid in nature, like cash and its equivalents. 

  • Non-Current Assets

    These types of financial assets include debentures and equity shares. These financial assets typically are held in the portfolio for a period of more than a year.

What are the Advantages of Financial Assets?

 

 

Some advantages of financial assets include:
 

  • Some financial assets that have higher liquidity can be used to pay for financial emergencies or bills. These include cash and its equivalents.

  • Investors feel stress free and financially secure when they have an adequate amount of capital invested in liquid assets.

  • One of the major functions of financial assets in the economy is to enable the purchase of tangible assets. It becomes possible to transfer funds from people who have surplus funds to where these funds are needed for financing.

  • Financial assets are diverse and any investor can choose an asset as per their investment goals and risk appetite.

Conclusion
 

Financial assets are highly liquid assets that are essential to fulfil the cash requirements. These are also an essential part of any investment plan. Financial assets are very important to handle financial emergencies. 

Therefore, one should keep a check on their financial assets to ensure they have adequate liquid assets. Each financial asset has a distinct value for the holder, carries different risks and provides different returns. Thus, in an investment plan, having a diverse range of financial assets is always recommended.

Discover Tailored Financial Planning Solutions to Secure your Future

+91 dropdown arrow
  • +93 Afghanistan

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.


 

Looking to buy a new insurance plan?

Our experts are happy to help you!

+91

Select plan
  • Term plans
  • Saving plans
  • Retirement plans
  • Wealth plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in

People Like You Also Read

How Can I Earn Rs.100 Per Day?
Read More
Pravasi Pension Scheme For NRIs: Eligibility and Application Procedure
Read More
How to Calculate the Term Plan Premium Amount?
Read More
5 Differences You Must Know Between Savings and Investments
Read More
Get Protection, Investment & Savings With Combo Insurance Plans | Tata AIA Blog
Read More
Are You An Ant or Grasshopper? Money Savings Lesson
Read More
4 Reasons Why Combining Protection with Savings Work
Read More
Investing in a Savings Plan? Here are 5 Critical Things to Consider
Read More
Goal Oriented Savings: Achieve Your Goals with Timely Savings
Read More
How To Inculcate the Value Of Saving In Your Children?
Read More

People Like You Also Read

How Can I Earn Rs.100 Per Day?
Read More
Pravasi Pension Scheme For NRIs: Eligibility and Application Procedure
Read More
How to Calculate the Term Plan Premium Amount?
Read More
5 Differences You Must Know Between Savings and Investments
Read More
Get Protection, Investment & Savings With Combo Insurance Plans | Tata AIA Blog
Read More
Are You An Ant or Grasshopper? Money Savings Lesson
Read More
4 Reasons Why Combining Protection with Savings Work
Read More
Investing in a Savings Plan? Here are 5 Critical Things to Consider
Read More
Goal Oriented Savings: Achieve Your Goals with Timely Savings
Read More
How To Inculcate the Value Of Saving In Your Children?
Read More
Website Logo Image Icon

Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions (FAQs)

Is life insurance a financial asset?

Yes, in a life insurance plan, the insurer agrees to compensate the insured if a specific happening affects the insured adversely. The worth of the life insurance contract is derived from the type of risk that it covers. Moreover, some life insurance plans also provide the insured a specified amount on the maturity date. Thus, they become financial assets at the time of maturity.

Are preference shares financial assets?

Yes, preference shares are financial assets. They give the investor the right to earn dividends, but they do not provide the investor with the right to vote. Moreover, the dividend on these shares will have to be paid in the event of profits or losses.

Can financial assets generate income?

Yes, you can receive income from financial assets. For instance, bank deposits can generate income in the form of interest, whereas equity shares can do the same in the form of dividends.

What are illiquid financial assets?

These are the types of financial assets that cannot be converted into cash easily. Some of the examples include land, machinery, real estate, etc.

Disclaimers

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • 2Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.