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What Is Investment Insurance?

An investment insurance plan, also known as a variable universal life insurance plan, provides both financial security as well as financial growth to the investor.

  • 18,984 Views | Updated on: Jun 25, 2024

Whether you are a young professional or an aged person, it is highly crucial to invest in insurance for your financial security. You and your family may be financially secure and sound, but an unexpected event can put your loved ones in financial hardships. If you want to get a security blanket, you must consider investing in insurance. Keep reading to know about the difference between insurance and investment; what is investment insurance, and what its benefits are.

Benefits of Insurance Investment

Insurance vs Investment

Life insurance refers to a service that one purchases with the motive to guard themselves or their family against any unfortunate events like loss of life, property, or health. In contrast, investment is the amount of money or asset that you give to a third party in exchange for the return as a profit at an agreed point in the future. There are many types of investment plans that you can buy according to your preference. The investment will take care of your now and immediate future, whereas insurance will provide cover to you and your loved ones in the long run. You can choose whether to buy an insurance policy or invest your money for future gains. However, it is advisable to buy an investment insurance policy which is a mix of insurance and investment, in order to enjoy the benefits of both the policies.

What is Investment Insurance?

An investment insurance plan, also known as a variable universal life insurance plan, provides both financial security as well as financial growth to the investor. It has two main parts:

  • Insurance plan
  • Investment

Under the regular insurance policy, you and your beneficiary receive the benefits of the policy after the occurrence of an uncertain event, but in the case of investment insurance, you receive a return from your policy before the occurrence of an unfortunate event. Therefore, you not only get a safety blanket but also get a profitable return on the investments.

How Does Investment Insurance Work?

Insurance investment plans are two-for-one investment plans Under this plan, when you pay your insurance premium, a part of it gets invested after a certain period. With an increase in the value of your premium, your investment also grows. This results in ROI that the policyholder can access before receiving the insurance payout during the uncertain incidence. The actual insurance amount will remain untouched. If by a good chance of fate, you never need to receive a payout from your insurance policy, you get both your insurance premium returned as well as the money you’ve received from your investment.

What are the Benefits of Investment Insurance?

There are numerous benefits associated with taking an investment insurance plan. Some of them are listed below:

Benefits from Flexible Premiums

The higher the amount of premium, the higher will be the returns. You get the option to pay more than the average premium. When you pay more than the minimum premium amount, the excess amount will get added to your investment, which helps your fund grow faster.

Funds for Emergencies and Leisure

Having an investment on top of your insurance will help you to earn back some of your investment that you can spend or invest on anything you want. It is advisable to re-invest your ROI to stay on track. With the extra income, you can pay for family emergencies that are not covered in your insurance policies or simply for leisure purposes.

Higher Returns

Unlike traditional insurance policies, investment insurance helps to maximize your earning potential by linking some of your investments to stocks and bonds, which can result in more enormous funds.

No Compromise on Your Policy

The investments depend on the state of the market and can result in a loss. The ROI may change depending upon the value of your premiums. However, this will not affect your insurance policy and will not be compromised by the results of your investment.

Conclusion

Now since you know the difference between investment and insurance, and what is investment insurance, research further and make an informed decision before purchasing any plan!

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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