Life insurance cos offer products that help customers build a long-term savings pool & ensure the safety of capital
Sunil, a 34-year old Lucknow-based small businessman, has two long-term objectives in mind: sending his 12-year-old daughter overseas for higher studies and leading an independent retired life. Given his preference for safe and secure investments, he should consider investing in products that offer the safety of capital and stable returns to achieve his financial goals.
Life insurance companies offer products that help customers like Sunil build a long-term savings pool while ensuring the safety of capital. This category is popularly known as traditional life insurance savings products. Traditional products largely invest in debt and fixed income instruments and therefore offer stable returns.
Traditional products not only enable customers to save for financial goals over a period of time but also provide financial security to the family in the form of a life cover in case of the demise of the policyholder.
In this category, there have been many innovative features introduced by life insurance companies. For example, now there are products that give customers the flexibility to receive the maturity proceeds as a lump-sum payout or income for a limited period of time or even the option to receive life-long income.
With products like these, Sunil can use the lump-sum payout option to pay for his daughters’ higher education. He can choose the option which gives income for a limited period to supplement his existing income while he is in a transitory stage of venturing into another line of business. He can use the life-long income option to lead a financially independent life after retirement.
In such products, customers receive an ‘annual reversionary bonus or what is popularly known as ‘bonus’. The annual bonus declared by the life insurance company is added to Sunil’s guaranteed maturity benefit, thereby enhancing his corpus and taking him one step closer to achieving his financial goals.
In the current environment, ensuring liquidity to meet unexpected financial emergencies is a top priority for Sunil. Here again, such products can help him get the loan against the policy feature. Sunil can avail of a loan, up to 80 per cent of the funds accumulated against his policy, providing him with immediate liquidity to meet his requirements. He has the option to repay the loan either through Equated Monthly Instalments (EMIs) or make a lump-sum payment any time before or on the date when the policy matures. All through the loan period Sunil and his family will continue to enjoy all the benefits of the policy. This feature ensures Sunil’s financial goals are not compromised and his family has financial security.
With these products, individuals can plan for important future life goals like a child's education, buying a home, or a peaceful life after retirement. With all the uncertainty engulfing us, it is of utmost importance to plan well for achieving the financial goals, and with these products, it becomes much easier.
The author is Chief Distribution Officer, ICICI Prudential Life Insurance
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