Life insurance is the best financial tool to secure your family's future in your absence. Insurance providers have enhanced the benefits of life insurance by introducing varied, comprehensive benefits. It can help you save money and invest in the long - term to increase your wealth. There are different types of comprehensive life insurance plans.

 

A wealth-building insurance plan is a popular life insurance plan that provides life insurance and wealth creation benefits. Here is a detail about what it means, how it works and its features and benefits.

 

What is a Wealth Insurance Plan?

 

Wealth insurance is a comprehensive life insurance plan that provides life insurance and market-linked returns. It is popularly referred to as the Unit Linked Insurance Plan(ULIP Plan). The life insurance will provide the sum assured to your nominee in the event of your unexpected demise. In addition, the insurer will provide market-linked returns based on your investment in the financial securities at maturity.

 

How Does the Wealth Building Insurance Plan Work?

 

Before you invest in a life wealth insurance plan, it is important to know how it works.One portion of the premium you pay for wealth insurance will be used to provide life coverage. And the other portion will be invested in the financial securities market. At the end of the policy tenure, you will receive the market-linked returns as a maturity benefit.

 

Wealth Insurance Plan Benefits

 

Wealth insurance plans are becoming increasingly popular due to their benefits. Here is a detail about it for your understanding.

• Dual benefits - Wealth insurance plans combine the benefits of life insurance and wealth creation options. Therefore, if you are the sole earning member in your family and looking for options to secure your family while also investing in financial securities to increase wealth in the long term, wealth insurance plans are ideal.
  
  

• Flexibility - One of the most important benefits of wealth insurance is its flexibility. Insurance providers offer different types of fund options to help you invest in it based on your risk appetite.
  
  

  For example, there are equity, debt and hybrid fund options for the high-risk, low-risk and medium-risk takers. Therefore, you can decide on your risk profile, considering your income and future financial commitments and invest in the right fund option. Our Tata AIA Life Insurance Company provides 11 different fund options. It is decided based on companies prevalent if varied sectors to diversify the portfolio.
  
  

  In addition to choosing the right fund option, you can switch between them if the market conditions are not favourable.
  
  

  For example, suppose you have invested in the equity fund option, and the investment value is decreasing due to an economic downturn. In that case, you can always switch to a debt fund to secure your investment.
  
  

• Long-term investment benefit - You can invest in the wealth insurance plan for the long term. When you invest in financial securities long-term, even a slight decrease in the investment value will get corrected during the long policy tenure. Therefore, the longer you invest, the greater the benefits. Also, the ULIP plan has a five-year lock-in period. Partial withdrawal is applicable after this period.
  
  

• Online usability - Insurers provide online life insurance policy options that can help you view the features, compare the benefits and help you choose the right option. We at Tata AIA life insurance company also provide an online premium calculator that helps you decide on the affordable premium based on your life insurance, wealth savings requirement and policy tenure. You can maintain your account online, monitor the fund value and switch between the options as and when required.
  
  

• Tax* benefits - The premium you pay and the payout benefits related to the wealth life insurance plan qualify for a tax* deduction and exemption subject to the prevailing tax* rules and conditions. With the expert advice of fund managers, you can derive maximum benefits.
  
  
  

What are the Advantages of a Wealth Insurance Plan?

Investing in a wealth insurance plan has varied advantages if you utilise the features appropriately. Here are a few advantages that you need to know.

• Riders^# - You can utilise the add-on life insurance riders^# to enhance the financial benefit apart from the life cover and the market-linked returns to manage specific scenarios such as getting affected due to a critical illness, total and permanent disability, etc.,
  
  

• Secure investment platform - As the wealth insurance plan offers flexible features, it is considered a safe investment platform for earning higher returns. Also, you can rely completely on the efforts of your fund managers to choose the fund option and make the necessary switches based on your financial requirements.
  
  

• Cost-effective - Compared to purchasing life insurance and investing in financial securities separately, it is considered cost-efficient in the long term if you make the necessary decisions timely.
  
  
  

What are the Charges Associated With a Wealth Insurance Plan?

Certain charges are associated with a wealth insurance plan considering its wide-ranging benefits.

• Premium allocation charges - Initial expenses related to policy allocation.

• Policy administration charges - Charges relating to the policy's administrative costs.

• Fund management charges - Charges relating to managing your fund options.

• Mortality charges - It is based on the life insurance cover on your wealth insurance plan.

• Switching charges - There are a certain number of free switches available. After that number, the switching will cost a minimum charge.
  
  

Apart from these charges, there are also partial withdrawal and policy surrender charges.

Conclusion

Investing in wealth insurance plans helps you secure your family in the event of your unexpected demise while increasing wealth in the long term through market-linked returns. In addition, you can choose to invest in the fund options based on your risk appetite and switch between them in case of economic downturns affecting market conditions.

Insurers provide a secure platform to help you invest in the online facility to purchase and manage wealth insurance throughout the policy tenure. So decide on your risk profile, consider your long-term commitments and choose the fund options for your wealth insurance plans to invest smartly! 

L&C/Advt/2022/Jul/1689