There are a variety of insurance products available in the market, and these include items such as child plans, health plans, and insurance plan. When you are thinking about the investment plan, you also need to know that there are many options available. The two main products available include the traditional investment plans and the unit-linked insurance products (ULIPs). Being able to distinguish these two plans will help you make the right choice as far as choosing an insurance product is concerned.
Unit-Linked Insurance Plan
This insurance option is ideal as it offers safety, as well as the option of growing your finances. A portion of the premium in ULIPs is utilized for providing coverage while the rest is for equity or debt investments, depending on what you prefer. This plan offers higher returns and makes it possible for you to choose investment and switching options. Although the returns are higher, you need to know that ULIPs have a high-risk factor as opposed to traditional plans.
There is a myriad of policies under this plan including term plan, endowment plan, and whole life. This type of plan is more popular because it offers a fixed amount to the beneficiary and nominee as indicated in the document. Apart from offering fixed returns, the traditional plan provides safety and covers risk to the policyholder. Since it invests in the debt instrument, the traditional plans offer fewer returns as opposed to ULIPs. This plan can, however, provide financial coverage to your loved ones in your absence when they are emotionally and financially unstable.
Both the Ulip products and traditional policies are flexible. The latter carry different features and offer benefits to the holder in the form of policy loan advantage, short-term cash requirements, automation premium facility, and more. However, some would feel that the traditional plans are not transparent enough because they do not offer NAV on a regular basis. But how many individuals check NAV daily? It is not surprising to find out that people do not check the NAV status daily. When it comes to the traditional plans, what matters are the regular updates regarding investments along with the capital safety. Traditional plans are ideal because they offer safety of capital, guaranteed returns, and yearly bonuses for the customers.
Which Option is better?
Comparing and deciding between either of these options can be challenging because the investment in any of these plans depends on the amount of risk you intend to take. In most cases, the younger generation will go for ULIPs as this option offers high returns within a short period. On the other hand, individuals of older age prefer the traditional plan because this option provides stability and ensures safety in savings, although the returns are lower than ULIPs.
As mentioned, deciding on which option to take is not always an easy task. However, the choice will depend on what you prefer as well as your thought process. It’s essential to seek the advice of experts so you can be confident you are making the right decision as far as these investment plans are concerned.
About Aegon Life
Aegon Life Insurance Company Limited launched its pan-India operations in July 2008 with a vision to be the most recommended new age life insurance Company. Aegon is one of the world’s leading financial services organizations (providing life insurance, pension plans, and asset management) and Bennett, Coleman & Company (India’s leading media conglomerate) have come together to launch Aegon Life Insurance. This joint venture adopts a local approach with the power of global expertise to facilitate a direct to customer approach, leveraging digital platforms to bring transparent solutions to customers and to prioritize their needs.