Looking for a life insurance policy that lets you invest your hard-earned cash? Well, look no further! Variable Life Insurance (VLI) is the answer!
VLI policies are typically offered as unit-linked insurance plans (ULIPs), which combine life insurance coverage with an investment component. ULIPs are a popular investment option for individuals looking to invest in the stock market or other investment vehicles, while also providing life insurance coverage. With VLI, you can invest your premiums into a range of investment options, like mutual funds, stocks, and bonds. Just keep in mind that the value of your investment can go up or down, depending on how those investments perform. It's kind of like playing the stock market, but with a life insurance policy But don't you worry - The good news is the Insurance Regulatory and Development Authority (AKA the IRDA) is on the scene to make sure you get all the info you need so you can trust that you're getting adequate disclosure on the investment options, risks, and charges. Plus, you'll get regular updates on everything so you can sit back, relax and let your investment do its thing. Easy peasy! Ain't that just grand?
VLI policies come with charges like premium allocation, policy administration, fund management, and mortality charges. Rest assured; the insurance company should disclose all charges linked to the policy to you as the policyholder.
There are two types of VLI policies the first one is a single premium policy where you pay one lump sum at the beginning, on the other hand with a regular premium policy, you pay smaller premiums at regular intervals (like monthly, quarterly, or annually) in both the scenarios the insurance company takes out charges and invests the rest in chosen options.
VLI policies offer a lot of flexibility! You can choose investment options that fit your financial goals and risk appetite. Plus, there's a death benefit if anything happens to you during the policy term, which can be a lump sum or a combo of the investment part and sum assured. If you need to surrender the policy early, you can get a surrender value, which is the investment component minus charges and other deductions. And don't forget about the tax benefits under Section 80C and 10(10D) of the Income Tax Act,1961!
A word to the wise If you're thinking about getting a VLI policy, it's important to give the policy document and charges a good read-through beforehand. Plus, you'll want to think about your personal financial goals, how long you want to invest, and your tolerance for risk before you jump in. Sticking with a trusted financial advisor can go a long way in helping you make the right decision about investing in a VLI policy.
