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How Insurance Can Be an Investment Tool for Indians

By Finserv MARKETS - Feb 28,2019
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How Insurance can be an Investment Tool for Indians

Whether it’s a Unit-Linked Insurance Plan or a traditional endowment plan, both help to inculcate a habit of saving amongst the masses. Since these are long-term plans, they ensure that the policyholder builds up a large corpus of money that can be used to fulfil financial goals and requirements. While a traditional endowment plan will help you save, unit linked insurance plans provide the added advantage of wealth creation. This article will give you some insight into how insurance can be used as a good investment tool.

Switching Option

ULIPs come with a switching option, which allows investors to avoid risks when the market conditions aren’t too good. You can shift your money into debt funds when you find the MARKETS are climbing and into equities when MARKETS are down. Applying this at least 2 to 3 times in your investment term of 20 years could prove to be very helpful in achieving your goals.

Benefit from the Power of Compounding

The five-year lock-in period that comes with ULIPs ensures long-term savings. This helps you grow your money by allowing it to benefit from the power of compounding. Essentially, the returns you earn will be reinvested, so the longer you stay invested, the more your money will grow.

Avail Tax Benefits

You can enjoy ULIP tax benefits when you invest your money in such a plan. Additionally, when your money is invested in equity funds they provide you with better returns than other types of instruments, as long as you stay invested for a longer period of time.

Has LTCG Tax Affected ULIPs?

Unit-linked insurance plans always had an advantage over equity mutual funds, even before the budget proposed to tax all long-term capital gains from mutual funds and stocks including Equity Linked Savings Scheme (ELSS). Since a unit linked insurance plan is an insurance product, gains that come with it are tax free under Section 10 (10D) of the Income Tax Act, 1961. Insurance providers highlight that ULIP returns  would be higher than equity, as gains from equity and balanced funds would be taxed at 10%, but the income you receive will be tax free. So, the LTCG tax does not affect ULIPs in anyway. In fact, since the tax has been levied solely on mutual funds, unit-linked plans have received a bit of a boost in the market. It is also important to remember that premiums paid are exempt from tax under Section 80C.

Now that you know about the benefits of using insurance as an investment opportunity, let’s explore the innovative insurance and investment plans offered by Finserv MARKETS.

“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”


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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522