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pension plan Investment Plan

Investment insurance plan, as the name suggests, acts like an investment tool and provides you insurance coverage side by side. A part of the premium paid by you is utilized by the insurance company to provide investment opportunities in the life cover and the rest of the amount is invested in the instruments that are chosen by you. You can target long term goals or focus on short term investment plans depending upon personal reason for investment. Not only you get the security that your funds are safe and they are growing but you also get the most-needed protection which gives you the sense of relief that your dependents will be provided with the financial support that you are looking for them after you.

These investment plans are essentially of two types:

  • 1. Unit Linked Insurance Plans or ULIPs: that provides returns based on market performance. Here the premium as paid by the policyholder in the stock market and gives them returns which are comparatively volatile as they depend on the performance of the stock markets – debt or equity.
  • 2. Traditional endowment plans: that offers a lump sum or annuity payout at the end of the investment policy term when the life insurance investment policy matures. These Plans offers lower but safer returns. However, unlike ULIPs, here a customer does not get to know where they are saving money or it is being invested due to the opaque construct. But these plans act as a guaranteed savings plan option as they offer definite returns.

Both these types of savings schemes or investment plans offer a policyholder life cover and a savings option but differ in their construct.


1. Insurance cover + investments: It gives protection to your loved ones. If anything unfortunate happens to the insured, his family will receive the sum for which he is insured in addition to the fund value either as a lump sum or in the form of periodic payments.

2. Secured way of creating wealth: It is a great way for saving money for a goal - the policyholder can define certain financial goals like child's marriage, education or retirement planning and accordingly choose the plan. The endowment funds offer a safe way to plan for retirement if you do not want to take market risk. Whereas, the ULIP plans offer an opportunity where you can take a look at their historical returns to calculate your investment and corpus build up in a few years time. Also, the lock-in period of a best investment plan or best saving scheme ensures the investment stays untouched and builds up over the years to help you achieve your objectives.

3. Tax Saving: Most of the plans today which are available in the market qualify for the tax deduction under Section 80C. Not only this, the lump sum amount received in the maturity of many plans is also Tax Free in nature under Section 10(10d). With this understanding the tax saving for any individual can vary from 10% to 33% depending on his/her income slab. Various ULIPs, traditional endowment plans becomes attractive keeping this feature in mind along with long term saving and investment of the hard earned money.

4. More options:

  • a. It provides the option to choose investment period that is, the time for which policyholder wants to pay the premium, however it largely depends upon the type of the plan chosen.
  • b. It also provides the option to acquire loan against the corpus of funds built no matter how much one wants to invest and in which insurance plan.
  • c. Riders: You can add riders like Critical Illness, Accidental death, waiver of premium, etc.

5. Returns: The returns offered are a good way to understand which plan is better which is not so certain a case with investment plans. Returns on investment plans are usually better if you consider post tax yields compared to other investment options (especially in Unit-Linked insurance Plans). Also, the returns in endowment plans only come after a few years while in the case of ULIPs, the insured can withdraw the entire amount once the lock in period has expired.

Types of Investment Plans

1. Life Insurance Investment Plans:The best investment plan offers the policyholder both life cover plus the added advantage of saving money. A life insurance investment policy is always taken keeping a future objective in mind and this objective could be either a long-term or a short-term objective, like buying a house, child's marriage and education or just building up a retirement corpus. The best investment plan acts as a two-in-one solution.

2. Unit-linked Insurance Plan: These plans are the most transparent form of insurance investments. Insurer deducts the charges for providing required cover, managements of funds and normal administration operations and rest amount is invested in fund chosen by life assured. Many plans provide flexibility to change funds in between for free or for nominal charges. One should go through past performance, charges structure; risk appetite while selecting ULIP plans. ULIPs should be bought with long term investment periods.

3. Endowment Plan: These are Traditional form of life insurance plans. Under an endowment plan, the insured receives a lump sum after a specified maturity period or on earlier death. Typically maturity periods range from 10, 15 and 20 years till a certain age limit. Though investments strategy largely remains non-transparent but they are safer than ULIPs. These plans are the best investment plan for investors who are not looking for a large corpus but are actually more concerned about keeping their money safe and secure, and still receive a certain amount of returns on their assets.

4. Guaranteed Return Plan: In such plans the maturity amount is confirmed at the time of taking policy hence there is no uncertainty left on market conditions or quantum of bonus declare by the company. These plans are good for saving money for unavoidable events. The policyholder needs to compare and know that the guarantee he gets here is specific to set of terms and conditions of the plan. These conditions could be either a:
a. Highest NAV, which is usually in Unit Liked Investment Plan
b. Capital Guarantee, again offered by Unit Liked Investment Plan
c. Maturity Guarantee, offered by traditional endowment plans

5. Money back plan: Money back plans combine the advantage of savings and also provide insurance cover. In such types of plans a certain amount of the sum assured is being given to the individual at regular intervals during the policy period. The balance amount is being paid during the maturity of the plan. If the policy holder dies during the policy period the nominee would get the sum assured as well as the bonus amount if any. Moreover the cash payout received at regular interval is exempted from tax. The amount of payout, terms of the policy, depends on the policy that one has opted. So one should compare money back policy and choose one that would best suit one’s needs.
Sometimes Money Back policies are considered similar to the endowment policies. However, the major difference between an endowment and money back policy is endowment policies do not provide returns at regular intervals. Only the survival benefits are paid at the time of maturity.

How much Tax can I save

Income Tax Section How much tax can you save
Sec. 80C Up to Rs. 46,350/- saved on investment of Rs.1,50,000/-
Sec. 80CCC Up to Rs. 46,350/- saved on investment of Rs. 1,50,000/-
Sec. 80D Up to Rs.16,995/- saved on Health Insurance premium of Rs.55,000/- (Inclusive of Rs.30,000/- towards health insurance of parents who are senior citizens)
Total Savings Possible Up to Rs. 63,345
Rs. 46,350/-* under Sec. 80C and Sec. 80CCC Rs. 16,995/-* under Sec. 80D
Sec. 10 (10D) Under Sec. 10(10D), the benefits received by you under a life insurance policy are completely tax-free subject to conditions specified therein

Tax benefits

Most of the plans today which are available in the market qualify for the tax deduction under Section 80C. Not only this, the lump sum amount received in the maturity of many plans is also Tax Free in nature under Section 10(10d). With this understanding the tax saving for any individual can vary from 10% to 33% depending on his/her income slab. Various ULIPs, traditional endowment plans becomes attractive keeping this feature in mind along with long term saving and investment of the hard earned money.

Investment Plans Classification

1. Guarantee/no- Guarantee of returns a. Guarantee of returns: lower but secure returns - ideal for investor is looking for safeguarding their assets and looking for stable growth of their money.
b. No- Guarantee of returns: better returns but do not promise definite profits as they are market linked.

2. Single/Regular Premium Plans: The single premium Plans are lower premium as the paperwork and other administrative charges are less. Whereas, Regular premiums are better for younger people who are just starting out on their careers and do not have much savings.

3. Life Stage/Non Life Stage Plans: These plans allocate assets according to the investor’s age. Those in their 20s or 30s are given adequate equity exposure as they can better manage the risk. For people in their 40s or 50s, the investment allocation shifts to less-riskier stocks and instruments that provide stable and secure returns. The plans for people in their 40s or 50s focus on gradual asset growth and conservation of the corpus already created.

4. Investment objective a. If savings, we need to look at ULIP with a guaranteed return possibility
b. For corpus building, a traditional ULIP with no guarantee
c. For a retired person, an annuity plan

Documents Required To Buy Pension Plan

Age Proof

Birth Certificate, 10th or 12th mark sheet, Driving License, Passport, Voter ID, etc.(Any one)

Identity Proof

Driving License, Passport, Voter ID, PAN Card, Aadhar Card, which proves ones citizenship

Address Proof

Electricity Bill, Telephone Bill, Ration Card, Driving License, Passport, should clearly mention the permanent address

Income Proof

income proof specifying the income of the person buying the insurance


Please note that the information provided is collected from sources publicly available & we believe to be reliable. The website doesn't warrant the accuracy, reliability & absolute information available on the website. Participation by site visitors or registered customers is on a voluntary basis. The policies are offered by various life Insurance & non-life insurance offering companies and Click2cover.in does not seek to, either directly or indirectly, advise, offer, solicit or recommend that any person who is or proposes to become its member should purchase the Policy.

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