Investment Linked Policy

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The investment linked policies (ILPs) are a long-term investment tool designed to offer protection to the policyholders, especially individuals. The policies safeguard the policyholders from risks and fluctuations in the financial markets. The ILPs are beneficial for the policyholders because, besides promoting long-term savings, the policyholders are not only protected against the policyholder’s death but also against the disability of the policyholder. The ILPs also help the policyholders in planning their retirement.

Investment linked policies (ILPs) are life cover products. Since they are long-term products, the benefits received on maturity are taxable. Hence, ILPs are suitable for individuals with large investments.

One should always understand the tax implications of investment linked policies. Investment linked policies can be asset class or an insurance policy. Investment linked products (ILPs) fall under the ILP category. They are basically a mix of insurance and investments. They are designed to generate a stream of income through investments.

What is an Investment Linked Policy?

Investments linked policies (ILPs) are relatively low-risk, long-term investment plans – they offer a guaranteed minimum return and protection from inflation. You can invest in this scheme through SIP and Systematic Investment Plan (SIP).

If you are of the age bracket where insurance has been on your mind, you would definitely require an Investment Linked Policy. In simpler words, an Investment Linked Policy is a life insurance policy and an investment plan rolled into one. It’s essentially a combination of insurance and an investment instrument.

Investment-linked policies (ILPs) are investments that generate income in the form of guaranteed, regular, periodic payouts. These payouts are linked to the performance of an underlying investment. These policies can be used as long-term wealth-building vehicles. Such policies offer a guaranteed income while also offering the potential to grow wealth over time.

An Investment Linked Policy (ILP) insures your investment against unforeseen misfortune. The premium that you pay is a percentage of the sum assured. The sum assured is the maximum amount that the insurer will pay on death. The death benefit is the money payable on the death of the policyholder. The investment part of the policy, which the insurer owns, earns a pre-determined interest rate through the years. The interest is added to the investment at age 100 and paid to the policyholder. You pay a premium for coverage only when you die. In other words, you pay your life insurance coverage premiums and claim benefits only when you die.

What is the Policy Linked in Investment?

Policy Linked Investments provide investors access to a wide range of products that can offer attractive returns. This form of investment can provide access to a broader range of asset classes and also be tailored to an investor’s individual risk appetite.

The Investment Linked Policy is a savings and investment policy that pays a guaranteed fixed rate of interest on savings and invests low-cost funds in stocks, bonds or a combination of both. The policyholder will receive these guaranteed returns in addition to any returns generated by the investments. The policyholder can also withdraw their savings and investments at any time.

Policy Linked in Investment is a mutual fund scheme that invests in debt and equity securities of public sector companies. The bonds and stocks are benchmarked against their respective indices. Policy Linked in Investment is promoted by the Life Insurance Corporation of India.

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