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What is an Investment Plan?
An investment plan is a financial instrument that helps an investor create sustainable wealth for their future and meet their financial goals by investing in a systematic manner. By investing in these plans an investor can get guaranteed returns, market-linked returns, or a combination of both, depending upon the nature of the plan chosen for investment. To simply put, an investment plan is one of the best and most convenient ways of appreciating wealth over a period of time.
How to Choose an Investment Plan?
Following are the things that you should keep in mind when choosing an investment plan:
- Analyse Goals: Analyse your financial goals and requirements
- Create a Strategy: Create a strategy to choose the best investment plan as per your requirements
- Evaluate Policy Term: Evaluate the term you want to make investment for, keeping in mind several factors such as current liabilities, number of dependents, etc.
- Compare Features: Compare several features, cover, riders, premium, payout type, returns etc. before investing in a plan
- Diversify Investments: It is recommended to go for a diversified portfolio. This means, instead of investing in one investment plan, you must choose multiples investment plans
- Monitor Investments Periodically: Review your investment plans periodically
Explore more Investment options
How to Buy an Investment Plan Online in India
Almost all the investment companies in India have an online presence. Buying an investment plan online is not only easy, but beneficial too. It saves your time, as well as evades the paperwork, thereby making it hassle-free. To buy investment plans online in India, you must follow the steps given below:
- Fill Your Details
Enter your personal details such as name, mobile number, gender and date of birth. Click on the ‘View Instant Quotes’ button to see available quotes.
- Enter Basic Details
Log in to the investment page. Then enter the basic details such as income, date of birth, etc.
- Get a Call Back
Enter the term that you want to buy the policy for, as well as the amount that you want to invest.Once you fill the lead generation form, our financial experts will soon get in touch with you.
Kindly note that when buying any investment plan, you will be required to complete the KYC, for which it is recommended that you keep all the important documents handy.
Documents Required for Buying Investment Plan
Following are the documents required to purchase an investment plan:
- Income Proof: Recent salary slips, bank statements, income tax returns, etc. along with a passport size photograph with relevant medical records.
- Address proof: You can use license, Aadhaar card, passport, or Voter ID card as address proof.
- ID Proof: PAN card, Voter ID card, Aadhaar card can be used as ID proof.
- Age Proof: You can use Aadhaar card, Voter ID card, Driving License or passport as age proof.
Popular Investment Plans Insurers
Name of the Company | Assets Under Management 2020 (in crore) |
Max Life Insurance | ₹69,109.79 |
HDFC Life Insurance | ₹1,28,173.98 |
Tata AIA Life Insurance | ₹31,195.48 |
Pramerica Life Insurance | ₹4,864.55 |
Exide Life Insurance | ₹15,589.14 |
Reliance Life Insurance | ₹20,288.79 |
Canara HSBC Life Insurance | ₹15,396.44 |
Bajaj Allianz Life Insurance | ₹56,185.89 |
Aegon Life Insurance | ₹2,564.10 |
ICICI Prudential Life Insurance | ₹1,52,203.27 |
Aditya Birla Sun Life Insurance | ₹41,112.33 |
Aviva India Life Insurance | ₹9,179.29 |
Bharti Axa Life Insurance | ₹6,962.08 |
PNB MetLife Insurance | ₹22,477.56 |
Star Union Dai-ichi Life Insurance | ₹9,207.49 |
Life Insurance Corporation of India (LIC) | ₹30,70,852.47 |
IndiaFirst Life Insurance | ₹14,540.60 |
Ageas Federal Life Insurance | ₹9,553.07 |
Kotak Life Insurance | ₹34,727.20 |
Future Generali Life Insurance | ₹4,387.07 |
SBI Life Insurance | ₹1,62,289.36 |
Shriram Life Insurance | ₹4,880.33 |
Sahara India Life Insurance | ₹1,407.04 |
Edelweiss Tokio Life Insurance | ₹3,126.77 |
Types of Investment Plan
Top Investment Plans in India 2022
Listed below are some of the best investment plans to buy in 2022 -
Name of the Investment Plan |
Key Features |
HDFC Sanchay Plus |
|
ICICI PruLife Gift Plan |
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HDFC Click to Wealth Plan |
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Edelweiss Tokio Wealth Plus Plan |
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Bajaj Allianz Goal Assure Plan |
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ICICI PruLife Smart Kid Plan |
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Canara HSBC Life Invest 4G Plan |
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ICICI Prulife Signature Plan |
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Things to Check Before Investment Planning
Following are the factors that you must keep in mind before buying an investment plan:
- Financial Goals: Clarity about your monetary goals will help you decide what type of investment scheme you must buy. The goals may include buying a house, a car, marriage, child’s education/marriage, or building a corpus amount. One of the investment options, ULIPs, can even help you meet your short-term goals like foregin trip, etc. In case you have a small family, or have just started with your career, then you can go for ULIPs to fund your short-term goals. Whereas if you are in your 40s or 50s, then endowment plans are recommended for you. So, before choosing an investment plan, it is essential to gain clarity about your financial goals.
- Current Expenses Vs Savings: The amount that an investor spends in an investment plan plays a major role in meeting the financial goals. If someone has more expenses than savings, then it may indicate that he/she may not be able to meet large short term goals with coverage plans. But if the investor does not have major expenses to meet, let’s say he/she lives in own house without having to pay any rent, then savings are likely to be more than expenses. In this case, it is best to purchase an adequate life cover with return benefits and avail two in one benefit.
- Future Expenses Vs Savings: If the current expenses of an investor are lesser, then it does not imply that the future expenses will be less too. Sometimes, the current expenses may be nowhere as compared to future expenses. For instance, someone may have fewer expenses because their children are young now. However, major expenses may still be their way in coming years which may be due to child’s education or marriage. In this case, the investor can go for an investment option that charges a premium for a few years and then pays enough that it can pay itself from the annuity or other regular benefits. Apart from this, investing a higher amount also lets you multiply your wealth for the future. So, planning future expenses as well as savings help you shortlist the plan to invest in.
- Emergency Fund: Investment plans not only cover your needs but also let you grow your wealth within the stipulated period of time. You can use this wealth to pay for major expenses anticipated such as purchasing a house, to pay for child’s education in upcoming years, marriage, or to meet daily expenses after retirement. This is possible with ULIPs including a child ULIP plan and endowment plans. These plans help you meet expenses in the future. Also a child ULIP comes with a special feature called waiver of premium option which proves to be furthermore beneficial.
- Desired Returns: The returns offered by investment plans should be enough to take care of the investor in case he/she is unable to work anymore or to take care of the family in case of misfortune event of death of the investor. The same goes with an insurance plan. It should offer the required cover as well as sufficient returns. The cover offered should be enough so that the life assured is able to provide for his/her family as well as themselves. To understand the requirement of an investor, one must analyse their expenses in accordance with what a policy has to offer. If your cover is less than required, then ULIP and endowment plans are recommended for you as they ensure an increase in wealth by also offering much needed protection at the same time.
- Number of Dependents: The next thing to think of before choosing an investment plan is the number of dependents. This is because it also determines the sum assured an investor may require. The dependents may be spouse, children, siblings, parents, parents-in-law, niece, nephew, etc. If the investor only has a spouse and children as dependents, then he would require a lesser sum assured and vice versa. In case the children are young, then they would require funds in future for education or marriage. Hence, it will be easier to choose a plan when the number of dependents are taken care of.
Eligibility Criteria to Buy Investment Plan
Any person who is a resident of India and is aged above 18 years can buy an investment plan of their choice. When buying an investment plan, you need to fulfil the following eligibility criteria:
- You will be required to meet the eligibility criteria as specified in the policy wordings
- You must fall under the age criteria to be covered under a particular plan
- You must agree to the premium payment mode as well as term of a particular investment plan
Frequently asked questions (FAQ’s)
- 1
What is investment planning?
Investment planning refers to the process of fulfilling your financial obligations/goals with your financial resources. Investment planning is the core financial planning that helps an individual to establish investment goals, determine their risk appetite and choose an investment option, which helps an individual to grow their wealth and fulfil their financial goals. Essentially this plan helps manage your investments and help you manage your money to achieve your goals.
- 2
When should I start investing?
There is no specific age at which one should start investing their earnings to grow a corpus. It is advised to start investing your money in different investment options at a young age or as soon as you start earning. This will provide you more time to build a bigger corpus. This way you will be able to overcome market risks and gain high returns in the long-term.
- 3
Are investment plans risk-free?
Market linked investment options always involve some kind of risk because return on investments totally depends on the performance of the investment option in the market. There are few risk free investment options available in India that provide guaranteed return on investment such as Savings account, Post Office Schemes, Fixed Deposits, Recurring Deposits etc.
- 4
Which is the best investment plan option in India?
There are plenty of investment plans available in India, you can choose an investment plan that suits your requirements. You should always choose an investment plan based on your risk tolerance. Check the rate of returns and select a plan that suits your needs.
- 5
Which investment plan gives the highest return?
Top investment option that can help you achieve high returns on investment are Direct Equity, Equity Mutual Funds, Debt Mutual Funds, National Pension System, Public Provident Fund, Bank Fixed Deposits, Senior Citizen’s Savings Scheme, Pradhan Mantri Vaya Vandana Yojana, Real Estate and Gold. You can choose to invest in the mentioned investment plan according to your risk appetite.
- 6
What are the 4 types of investments?
There are 4 main types of investments available in India classified on the basis of characteristics, risks and benefits. The 4 types of investment are Stocks, Bonds, Mutual Funds and Cash Equivalents.
- 7
What are 3 good investments?
As a beginner you can consider some investment options which will help you avail high return on investment. 3 good investment options for beginners are Unit Linked Insurance Plans, Bank Fixed Deposits and Mutual Funds.
- 8
How can investment plans help in retirement planning?
Investment plans can help an individual create a corpus for retirement, helping them to ensure a financially independent life as they retire. An individual can choose to invest in retirement savings plans that provide a lump sum as retirement fund or maturity benefit which can help an individual to ensure income after retirement.
- 9
What is the difference between saving and investing?
People almost use savings and investment conversely not knowing that both of them are different from each other. Savings accounts are low risk accounts under which rate of interest is earned on the money one saves. Savings account lets an individual save money for a short period. On the other hand investments involve high risk and the return on investment are high as compared to savings. Investments let an individual create wealth over a long period of time.
- 10
How can I save tax on my investments?
While choosing an investment option look for one which provides tax benefits under Section 80C of the Income Tax India, 1961. Some investment options that provide tax exemptions are Equity Linked Savings Scheme, Public Provident Fund, Employee Provident Fund, Unit Linked Insurance Plans etc.