Tips to buy cheap investment plan

Article by Andy Smith

Finance plays a very important role in the short run as well as in the long run in every one’s life. Uncertainty of future, retirement in the old age, steady income in the future and inflation in the financial world are some of the reasons why most people resort to invest their money in some form of investment.

Today, there are many investment plans that are available in the market such as bank deposits, recurring deposits, time deposits, PPF or Public Provident Funds, life insurance plans, mutual funds, investment in share market, etc. All these are investment options that provide secured future to the investor.

Insurance is one such investment plans today that is being utilized by people as one of the low cost investment options. Life insurance investment can be of many kinds. Life insurance depend specifically on the needs of the person ranging from steady income in the future, child plans, term plans, money back plans, pure investment plans, hospitalization plans, monthly income plans, guaranteed plans, etc.These are specific needs that a life insurance investments address. Some of these insurance plans are ULIP or Unit Linked Insurance Plans. ULIP is a new concept, where the premiums paid by the policy holder are invested in the share market.

These investment plans are categorized as low cost or cheap investments. They are considered low cost because the investment is made regularly such as monthly, quarterly, half yearly or yearly in small amounts. Making investments in small amounts can be a very good option, particularly for salaried people who need to manage their finances both in the short run as well as in the long run.

Life insurance investment in various plans such as future income, child plans, term plans, money back plans, pure investment plans and other plans have their own advantages. For example, an investment in future income will be useful after, say 20 years or 25 years in the future because, a person will retire after that time and will need a steady income after retirement. The policy holder will be paid a pre-decided fixed annuity every month during the life time of the policy holder. Some insurance policies under these are ULIP policies.

These unit linked polices are better suited for long term investments.Child plans provide support for the education of children. Investment made in these plans will provide a return after 10 years or 15 years of time in lump sum amount.

Term insurance plan is a basic insurance plan in which the policy holder will pay premiums and the amount will be received by the survivors or the nominees of the person. Premiums under term insurance are generally low when compared to other insurance plans. Insurance plans also provide the option of tax deduction. The amount of premium paid under insurance is not taxed by the Income Tax department.