\u003Cspan>Plot No:31 & 32, Beside Union Bank Training Centre,\u003C/span>\u003Cbr />\u003Cspan>Financial District, Gachibowli,\u003C/span> \u003Cbr />\u003Cspan>Hyderabad-500032, India.\u003C/span>\u003C/p>"},{"title":"Helpline","heading":"Helpline","description":"\u003Cul>\u003Cli>\u003Ca href=\"tel:1800-103-5319\">Customer - 1800-103-6116\u003C/a>\u003C/li>\u003Cli>\u003Ca href=\"tel:1800-103-2671\">Agent - 1800-103-2671\u003C/a>\u003C/li>\u003C/ul>"}],"social_media_group":[{"title":"Follow us on","heading":"Follow us on","social_media":[{"title":"Facebook - Follow us on","icon":[{"media_img":null,"media_svg":"https://cdn.shriramlife.com/slic-kalam/files/2023-04/facebook.svg","media_svg_alt":"facebook","media_document":null}],"menu_link":{"url":"https://www.facebook.com/Shriramlife","text":"https://www.facebook.com/Shriramlife"}},{"title":"Twitter - Follow us on","icon":[{"media_img":null,"media_svg":"https://cdn.shriramlife.com/slic-kalam/files/2023-09/Twitter_X__1_%20%282%29.svg","media_svg_alt":"twitter","media_document":null}],"menu_link":{"url":"https://twitter.com/shriramlifeins","text":"https://twitter.com/shriramlifeins"}}]}],"app_group":[{"title":"Download App","heading":"Download App","Apps":[{"title":"Download App - Android","heading":"Android","icon":[{"media_img":null,"media_svg":"https://cdn.shriramlife.com/slic-kalam/files/2023-04/android.svg","media_svg_alt":"android","media_document":null}],"menu_link":{"url":"https://play.google.com/store/apps/details?id=com.svs.slic","text":"https://play.google.com/store/apps/details?id=com.svs.slic"}}]}],"copy_rights":"\u003Cp>© Shriram Life Insurance Co. Ltd. All the rights reserved. Registered with Insurance Regulatory & Development authority of India (IRDAI) as Life Insurance Company. Regn. No. 128. CIN: U66010TG2005PLC045616\u003C/p>"}],"headers":{"x-powered-by":["Express"],"x-frame-options":["SAMEORIGIN"],"content-type":["text/html; charset=utf-8"],"content-length":["15880"],"etag":["W/\"3e08-2xH19OilXJJc1owCs3X3wFooLo4\""],"vary":["Accept-Encoding"],"date":["Tue, 21 Jan 2025 07:27:18 GMT"],"connection":["keep-alive"],"keep-alive":["timeout=5"]},"status":200,"statusText":"OK","url":"http://127.0.0.1:4000/api/v1/footer","responseType":"json"},"2002562214":{"body":[{"category":[{"id":1781,"name":"Super Income Plan"},{"id":1782,"name":"Advice"},{"id":1930,"name":"Child Plan"},{"id":1979,"name":"Early Cash Plan"},{"id":1982,"name":"Assured Income Plan"},{"id":1984,"name":"Golden Premier Saver Plan"},{"id":1985,"name":"Premier Assured Benefit"}],"blogs":[{"title":"Key Differences of Policy Term and Premium Paying Term","heading":"Key Differences of Policy Term and Premium Paying Term","short_description":"\u003Cp>When it comes to financial planning, it is important to be prudent and well-informed.\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2025-01/10.%20Clarifying%20Policy%20Term%20and%20Premium%20Paying%20Term_0.webp?VersionId=8PsDtHY8xGLnr1dtpAt4XNa.aB.pfMEf","alt":"Policy Term vs Premium Paying Term"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2025-01-21T05:54:26","updated_on":"2025-01-21T05:54:31","read_more_title":"Know More","slug":"/key-differences-of-policy-term-and-premium-paying-term","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/insurance-policy\" hreflang=\"en\">Insurance Policy\u003C/a>","description":"\u003Cp>When it comes to financial planning, it is important to be prudent and well-informed. Understanding how a Life Insurance Policy works is a key part of this. When you know the options available and how each of those options works, you can make well-informed decisions to achieve a personalized financial protection plan.\u003C/p>\u003Cp>Two important concepts in the life insurance domain are - the policy term and premium paying term. Let us examine each in detail. Understanding what each of these means will aid in one’s understanding of how insurance policies work. \u003C/p>\u003Cp>Both the policy term and premium paying term, though reads similar, refer to two distinct components of a life insurance policy each carrying significant implications for both the policyholder and their beneficiaries.\u003C/p>\u003Cp>In this blog, we will explore these terms in-depth, examining their fundamental differences, key factors to consider when making decisions about them, and scenarios in which they are particularly applicable to various financial situations. This comprehensive analysis aims to equip you with the knowledge necessary to plan your life insurance plans effectively.\u003C/p>\u003Ch2>\u003Cstrong>What Is A Policy Term?\u003C/strong>\u003C/h2>\u003Cp>A policy term refers to the duration of the policy that is covered under the insurance policy. A insurance policy of 40 years will have a policy term extending to 40 years during which time, the insured’s family members will receive the compensation of the policy in case of an unfortunate event in the insured’s life.\u003C/p>\u003Ch2>\u003Cstrong>What is a Premium Paying Term (PPT)?\u003C/strong>\u003C/h2>\u003Cp>Premium paying term refers to the period in your insurance policy in which you pay premiums to maintain your insurance coverage. Example, if a insurance policy extends to 40 years of which, the insured is expected to pay premiums until 20 years, then the premium paying term for that particular policy will be 20 years.\u003C/p>\u003Ch3>\u003Cstrong>Differences Between Policy Term and Premium Paying Term\u003C/strong>\u003C/h3>\u003Cp>Understanding the difference between policy term and premium paying term can help you make informed decisions when choosing a Life Insurance Policy that aligns with your specific needs and financial goals. A few of the most important differences are put together below:\u003C/p>\u003Ch3>\u003Cstrong>Examples\u003C/strong>\u003C/h3>\u003Ch3>\u003Cstrong>Duration of Coverage:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term-\u003C/strong> If you choose a 20-year policy term, then your dependents will be covered for that period of 20 years. If the unfortunate demise of the policyholder or life insured occurs within such a period, then the will beneficiaries receive the agreed-upon death benefit.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term- \u003C/strong>However, if your premium paying term is 10 years, you will pay premiums for only 10 years, but your coverage will continue for the full 20 years. After the premium paying term is completed, the plan continues with the coverage and benefits and no further premiums need to be paid by the policyholder.\u003C/p>\u003Cp>In such an instance, risk coverage provided by the insurer is typically paid for from within the accumulated funds within the plan.\u003C/p>\u003Ch3>\u003Cstrong>Financial Implications:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term-\u003C/strong> A 30-year policy term ensures that your family will receive the death benefit for three decades. This extended coverage is particularly beneficial during critical life stages, such as raising children or paying off a mortgage, when financial obligations are at their peak.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term- \u003C/strong>The premium paying term specifies the period during which you are required to make premium payments. A shorter premium paying term, such as a 15-year premium paying term, can significantly ease your current financial burden. If you are considering accumulation of funds or savings alongside the insurance protection, some plans where your premium amount is deployed in market linked investments, paying more years would obviously enhance the amount of corpus at the end of the policy term.\u003C/p>\u003Ch3>\u003Cstrong>Flexibility:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term- \u003C/strong>If you choose a 20-year policy term, your dependents will be covered for the entire 20 years. Should you pass away within this period, your beneficiaries will receive the agreed-upon death benefit, providing them with financial security during a crucial time.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term-\u003C/strong> However, if your premium paying term is 10 years, you will pay premiums for only 10 years, while your coverage continues for the full 20 years. After the premium paying term ends, you won’t need to make any further payments, yet your beneficiaries will remain protected until the policy term expires, ensuring peace of mind without ongoing financial commitments.\u003C/p>\u003Cp>The other significant difference is the flexibility offered in each term. While many policies provide flexible premium paying terms, once a policy term is selected, it is usually fixed.\u003C/p>\u003Ch2>\u003Cstrong>Factors to Consider in Selecting Policy Term and Premium Paying Term\u003C/strong>\u003C/h2>\u003Cp>It is based on several considerations compatible with your current financial situation as well as future objectives. Among them, the following are a few important ones:\u003C/p>\u003Ch3>\u003Cstrong>Policy Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>\u003Cstrong>Financial Goals:\u003C/strong> What are you looking to achieve with your life insurance? Are you looking to provide financial assistance for your family in the event of an untimely death, or do you want to accumulate cash value for future use?\u003C/li>\u003Cli>\u003Cstrong>Age:\u003C/strong> In this again, age is a very important determinant of the term by which one should have a policy. Younger policyholders will benefit from long periods that cost them less, whereas older persons are most likely to opt for shorter terms based on their remaining life and obligations against them. This is not mandatory guideline but indicates usual patterns across different age groups of policy holders.\u003C/li>\u003Cli>\u003Cstrong>Family Needs:\u003C/strong> If you have dependents, you must choose a policy term that will be able to provide enough cover until they are independent and financially sound. A longer term will assure you peace of mind in these important years.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>Premium Paying Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>\u003Cstrong>Affordability:\u003C/strong> It is very important to choose a premium paying term that would fall within your capacity to pay.\u003C/li>\u003Cli>\u003Cstrong>Investment Strategy: \u003C/strong>If the purpose of purchasing a life insurance policy is for investment, then one should consider how the premium paying term fits into your overall investment strategy. Longer premium paying terms may allow growth in some types of policies.\u003C/li>\u003Cli>\u003Cstrong>Flexibility:\u003C/strong> Check if policies have flexible terms for premium payments. This flexibility may prove to be priceless when you think you might undergo a change in your financial circumstance that will affect your ability to pay premiums.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>Common Scenarios\u003C/strong>\u003C/h3>\u003Ch4>Scenario 1: Young Policyholder with Limited Pay Plan\u003C/h4>\u003Cp>Let's take the case of Radha, an individual who is in her early thirties. She chooses a 20-year policy term for her life insurance policy which means her coverage will extend until her early fifties. She further opts to pay her premiums for a 10-year premium paying term. That is precisely what she needs:\u003C/p>\u003Cp>\u003Cstrong>Duration of Insurance Coverage:\u003C/strong> Radha wants to ensure that her family, namely her children will get a financial benefit in case of her demise. This protection for 20 years is because by that time, they will likely be independent adults themselves and until that time, they will have the 20 years of protection through death benefit.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term: \u003C/strong>For 10 years, she pays premiums during her known productive working years and will cease to do so around the time her expenses for her children’s education or life goals may be higher. are inexpensive at this stage in crucial child-rearing years. It means that after this 10 year period, she will no longer pay the premium anymore, but her life is covered under life insurance until age 50 and her dependents will receive the death benefit payout until that time, in case of her death.\u003C/p>\u003Cp>As you can see from the above example, the planning for the policy period and the premium payment term must be based on a proper understanding of one’s needs and in alignment with one’s life journey.\u003C/p>\u003Ch4>Scenario 2: Older Age Client with Long-Term Needs\u003C/h4>\u003Cp>Here’s another scenario of Murali, now at the age of 40, with a more permanent source of income and seeking insurance coverage that will provide him with more than enough when he is at an old age. Here the goals are dual - one part is financial protection from the risk of death during one’s productive years. The second part is to accumulate savings to support one’s living beyond the retirement age by using the savings aspect of a suitable life insurance plan. Murali therefore chooses a 30-year policy term coupled with a 30-year premium paying term. This is how it works for him:\u003C/p>\u003Cp>\u003Cstrong>Duration of Insurance Coverage:\u003C/strong> Murali wants long-term coverage for his family, especially as retirement age is approaching and the children are still financially dependent and his spouse depends on his income.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term: \u003C/strong>Murali is committing to predictable premium payments extending over a 30 year span. It fits in well with his monthly budget and financial planning. Once this phase is over, he will have accumulated a good amount while having enjoyed the coverage. This way when he reaches retirement age and his income may drop he will have some funds to rely on.\u003C/p>\u003Cp>In this way, Murali is able to plan for his family’s finances in the event of his death during his working years and also parallelly save towards his retirement years.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Understanding the distinction between the policy term and the premium paying term equips you with the knowledge necessary to make informed choices. Additionally, this understanding allows you to recognize the flexibility some plans provide, enabling you to tailor them to your specific needs. We hope this insight helps simplify your decision-making process concerning coverage, financial commitments, and your overall financial strategy.\u003C/p>\u003Cp>\u003Ca href=\"https://www.shriramlife.com/\" target=\"_blank\">Shriram Life Insurance\u003C/a> provides wide range plans, including \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">Retirement Plans\u003C/a>, \u003Ca href=\"https://www.shriramlife.com/life-insurance/savings-plan\" target=\"_blank\">Savings Plans\u003C/a>, \u003Ca href=\"https://www.shriramlife.com/life-insurance/child-plan\" target=\"_blank\">Child Plans\u003C/a>, and \u003Ca href=\"https://www.shriramlife.com/life-insurance/protection-plan\" target=\"_blank\">Protection Plans\u003C/a>, designed to meet your financial needs.\u003C/p>","category":"/blog/advice"},{"title":"The Impact of Lifestyle Choices on Life Insurance Premiums","heading":"The Impact of Lifestyle Choices on Life Insurance Premiums","short_description":"\u003Cp>Investing in life Insurance policies is one of the best decisions you can make to secure your family’s financial future.\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2025-01/3.%20The%20Impact%20of%20Lifestyle%20Choices%20on%20Life%20Insurance%20Premiums%20copy_2.webp?VersionId=xR3yulN0Rjs867cuG5tZkrdUG2t7aUcy","alt":"Lifestyle choices Impact on life insurance Premiums"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2025-01-20T05:36:04","updated_on":"2025-01-20T05:36:08","read_more_title":"Know More","slug":"/impact-of-lifestyle-choices-on-life-insurance-premiums","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/insurance-policy\" hreflang=\"en\">Insurance Policy\u003C/a>","description":"\u003Cp>Investing in life Insurance policies is one of the best decisions you can make to secure your family’s financial future. It will create a financial safety net for your loved ones in exchange for predetermined premium payments. While all life insurance plans are designed for the same purpose, different policyholders pay different premiums to receive similar benefits or even the same life insurance coverage. Why does this happen?\u003C/p>\u003Cp>This difference in premium rates is because of the policyholder’s age, health, and likely also lifestyle, habits, and pre-existing health conditions or risks. It can be surprising to most, but what you eat, how you live, the risks you take, and other lifestyle choices have some bearing or influence on your insurance premiums. This blog highlights major lifestyle factors affecting life insurance premiums.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Life Insurance Premiums\u003C/strong>\u003C/h2>\u003Cp>A life insurance premium is a predetermined one-time or consistent payment a policyholder makes to maintain the validity of a life insurance policy. Paying timely premiums ensures your family receives the policy benefits in the unfortunate event of your death.\u003C/p>\u003Cp>The premium concept appears straightforward, but insurers assess multiple factors to determine policy premiums for different individuals. While there are numerous factors affecting life insurance premiums, the following are the most prominent.\u003C/p>\u003Ch3>\u003Cstrong>Age\u003C/strong> \u003C/h3>\u003Cp>Older adults and seniors generally pay higher premiums than young individuals because the risk of death increases with age. Insurance providers levy higher premiums to cover this increased risk. Hence, life insurance planning should start at a young age.\u003C/p>\u003Ch3>\u003Cstrong>Gender\u003C/strong>\u003C/h3>\u003Cp>Insurance companies use statistical models to estimate how long an individual with a specific profile will live, influencing the premium rates. Since Indian female’s average life expectancy surpasses that of Indian males by 2.5%, women pay lower premiums than men.\u003C/p>\u003Ch3>\u003Cstrong>Lifestyle Choices\u003C/strong>\u003C/h3>\u003Cp>You may be subject to higher risk if you work in risky occupations like mining, construction, etc., or frequently engage in adventurous activities like scuba diving, paragliding, etc. If people with this risk profile buy \u003Ca href=\"https://www.shriramlife.com/life-insurance/protection-plan\" target=\"_blank\">protection plans\u003C/a> and \u003Ca href=\"https://www.shriramlife.com/life-insurance/child-plan\" target=\"_blank\">child plans\u003C/a>, they’ll naturally pay higher premiums than those with a safer occupation and less adventurous lifestyle. For greater understanding, we have covered the major lifestyle choices that impact insurance premiums in a later section. \u003C/p>\u003Ch3>\u003Cstrong>Family Medical History\u003C/strong>\u003C/h3>\u003Cp>Family medical history gives insight into hereditary diseases or health conditions that may influence the policyholder’s life expectancy. You’ll be charged higher premiums if your family has a medical history of critical illness or diseases like diabetes, cancer, heart disease, etc. You can explore \u003Ca href=\"https://www.shriramlife.com/contact-us/faq\" target=\"_blank\">life insurance FAQs\u003C/a> to gain more insights about the critical illnesses or diseases affecting insurance premiums.\u003C/p>\u003Ch3>\u003Cstrong>Pre-Existing Conditions\u003C/strong>\u003C/h3>\u003Cp>All insurance companies count pre-existing conditions as among the factors for evaluating risk. This further varies on the type of pre-existing health conditions, their severity, and their impact on the proposed policyholder’s health. People with critical pre-existing conditions pay higher premiums than those with no pre-existing conditions. If you’re investing in the \u003Ca href=\"https://www.shriramlife.com/life-insurance/early-cash-plan\" target=\"_blank\">Shriram Life Early Cash Plan\u003C/a> to protect your family against financial uncertainties in case of your death, you may have to pay higher premiums if diagnosed with pre-existing conditions and vice-versa.\u003C/p>\u003Ch3>\u003Cstrong>Sum Assured\u003C/strong>\u003C/h3>\u003Cp>Higher sum assured leads to higher premium rates and vice-versa. You can use a reliable life insurance premium calculator to get near-accurate premium estimates based on the policy’s sum assured and other factors.\u003C/p>\u003Ch3>\u003Cstrong>Policy Term\u003C/strong>\u003C/h3>\u003Cp>The longer the insurance policy term, the higher the premium is. Extended policy terms increase the chance of insurance companies having to pay a claim, resulting in higher premiums. You can use our online life insurance premium calculator to get near-accurate premium estimates.\u003C/p>\u003Ch2>\u003Cstrong>Lifestyle Factors Affecting Premiums\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Health and Medical History\u003C/strong>\u003C/h3>\u003Cp>Your medical history and overall health, including existing health status, pre-existing health conditions, etc., significantly impact your premium rate. For example, insurers consider people with a family history of serious health diseases or pre-existing conditions signaling diabetes, hypertension, obesity, etc., risky. \u003Cbr />Some insurers may request a medical examination or detailed health records to assess an individual’s risk profile. The higher the individual’s risk profile, the higher the premiums are and vice-versa. You must follow health and wellness tips to improve your overall health, leading to lower insurance premiums.\u003C/p>\u003Ch3>\u003Cstrong>Smoking and Substance Use\u003C/strong>\u003C/h3>\u003Cp>Smoking and substance usage puts you at a higher risk of developing serious health challenges. Hence, insurance companies levy higher premiums on smokers and substance users compared to non-smokers. You can be classified as a smoker even if you smoke occasionally.\u003C/p>\u003Cp>Avoid lying to the insurer about your smoking habits because misleading with wrong information can get your policy cancelled and claims rejected. You can use our \u003Ca href=\"https://www.shriramlife.com/smoking-calculator\" target=\"_blank\">smoking calculator\u003C/a> to assess the financial cost of your smoking habit. This information can help you realize the extent of financial damages, giving you strong reasons to curb your smoking habit. \u003C/p>\u003Ch3>\u003Cstrong>Occupation and Hobbies\u003C/strong>\u003C/h3>\u003Cp>People working in occupations exposed to greater risk are charged higher premiums than people employed in safer professions/industries. For example, people working in industries like mining, oil, gas, construction, adventure sports, etc., are more exposed to risky environments that may result in death. Hence, their premiums charged on all \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">retirement plans\u003C/a> and \u003Ca href=\"https://www.shriramlife.com/life-insurance/savings-plan\" target=\"_blank\">savings plans\u003C/a> are always higher than those charged to professionals with desk jobs. A similar rule applies to people with adventurous hobbies.\u003C/p>\u003Ch3>\u003Cstrong>Diet and Exercise\u003C/strong>\u003C/h3>\u003Cp>What you eat and how you treat your body is a significant lifestyle factor influencing your insurance premium. People leading a healthy lifestyle fueled by healthy eating, regular exercise, etc., are at a lower risk of developing health challenges. It translates to comparatively lower premiums.\u003C/p>\u003Cp>However, people with a sedentary lifestyle and unhealthy eating habits are subjected to higher premiums. If you want to improve the quality of your life, start following a healthy diet and regular exercise. Pair it with making the right investments in products like \u003Ca href=\"https://www.shriramlife.com/life-insurance/assured-income-plan\" target=\"_blank\">Shriram Life Assured Income Plan\u003C/a> to improve your family’s financial life during challenging times, when you’re not around.\u003C/p>\u003Ch2>\u003Cstrong>Steps to Lower Life Insurance Premiums\u003C/strong>\u003C/h2>\u003Cp>If you want to get lower life insurance premiums, you must work on improving your overall health and lifestyle. For example, if you’re a smoker, then make an effort to quit smoking. People with sedentary lifestyles must follow regular exercise routines and healthy eating habits to improve their health, attracting lower premiums.\u003C/p>\u003Cp>You can reduce your participation in risky activities and take consistent steps to lower your stress levels. Making these changes a part of your daily life will bring massive improvements in your health condition. It may give you further financial incentives by helping you save by bringing your premium to a normal risk level premium.\u003C/p>\u003Cp>Use this opportunity to get the \u003Ca href=\"https://www.shriramlife.com/life-insurance/wealth-pro\" target=\"_blank\">Shriram Life Wealth Pro plan\u003C/a> at a comparatively lower premium. This unit-linked plan can help you grow your investment while creating a financial safety net for your family in the unfortunate event that you’re not being around to provide for them. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Every decision we make regarding our eating habits, activity selection, etc., influences our lives in various ways. They affect our health, quality of life, and insurance premium rates. So, if you’re planning to secure your family under generous life insurance coverage, ensure you maintain a healthy lifestyle to attract lower insurance premiums. You can make healthy lifestyle adjustments by factoring in the points discussed above to enjoy the dual benefits of excellent health and lower premiums.\u003C/p>","category":"/blog/advice"},{"title":"How Life Insurance Can Support Long-Term Financial Goals","heading":"How Life Insurance Can Support Long-Term Financial Goals?","short_description":"\u003Cp>A term that helps us to save towards our life goals and manage life’s unexpected challenges along the way.\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2025-01/26.%20India%27s%20Tax%20Structure_%20A%20Closer%20Look%20at%20Different%20Taxes_0.png?VersionId=BcD3jvV.kwwhYyi5L.foJWVYfHA5kyOR","alt":"Life insurance- a part of long term financial goals"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2025-01-08T11:28:38","updated_on":"2025-01-08T11:28:43","read_more_title":"Know More","slug":"/how-life-insurance-can-support-long-term-financial-goals","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/insurance-policy\" hreflang=\"en\">Insurance Policy\u003C/a>","description":"\u003Cp>A term that helps us to save towards our life goals and manage life’s unexpected challenges along the way.\u003C/p>\u003Cp>When it comes to saving money, people generally fall into two categories: irregular and regular savers. Irregular savers save money whenever possible, thinking little about their retirement plans and future. However, regular savers are diligent people who invest their money in multiple ways, carefully planning to meet their financial goals and choosing investments to suit them.\u003C/p>\u003Cp>If you fall into the first category, you are not alone. The Economic Times reports that around 69% of Indian households struggle with financial insecurity. Likewise, a recent Reserve Bank of India survey highlights a sharp decline in India's net household savings, which dropped from 7.3% to 5.3% of GDP. Therefore, financial planning becomes very important in situations like these. Life Insurance is essential in long-term financial strategies, providing financial security for dependents in case of any unforeseen event. It also serves as a wealth-building tool and provides tax benefits, ensuring financial stability for the future. So, in this article, we shall learn why a Life Insurance policy is an important part of your long-term financial goals and how you can choose the one that fits your needs.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Life Insurance is a contract between an individual and an insurance company. In exchange for regular premium payments, the insurer guarantees a death benefit to the designated beneficiaries. The premiums vary depending on the policy type, the coverage amount, and the policyholder's age and health. The basic concept is to provide financial protection to the policyholder’s family or dependents in case of an untimely death, ensuring their financial security. \u003C/p>\u003Ch2>\u003Cstrong>Types of Life Insurance Policies\u003C/strong>\u003C/h2>\u003Cp>There are several types of Life Insurance policies available in India, each designed to meet different financial needs and goals. \u003C/p>\u003Ch2>\u003Cstrong>Term Insurance\u003C/strong>\u003C/h2>\u003Cp>Term Insurance is one of India's most affordable and widely chosen types of Life Insurance. It provides coverage for a specific period, such as 10, 20, or 30 years, and pays a death benefit if the insured passes away during the term. Term Insurance provides life cover without any maturity benefit, making it a cost-effective option. Shriram Life Insurance provides affordable Term Insurance plans such as \u003Ca href=\"https://www.shriramlife.com/life-insurance/online-term-plan\" target=\"_blank\">Online Term plan \u003C/a>that provide high sum assured at competitive premiums.\u003C/p>\u003Ch2>\u003Cstrong>Whole Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Whole Life Insurance provides coverage for the entire lifetime. It includes a guaranteed death benefit and a cash value component that grows over time. Whole Life Insurance tends to have higher premiums than Term Insurance due to lifelong coverage and cash value accumulation. \u003Ca href=\"https://www.shriramlife.com/blog/advice/what-is-a-whole-life-insurance-policy-things-to-consider\" target=\"_blank\">Shriram Life's Whole Life Insurance plans\u003C/a> provide lifetime coverage and the added benefit of building cash value over time, making them a solid option for long-term financial security.\u003C/p>\u003Ch2>\u003Cstrong>Unit Linked Insurance Plans (ULIPs)\u003C/strong>\u003C/h2>\u003Cp>\u003Ca href=\"https://www.shriramlife.com/life-insurance/investment-plan\" target=\"_blank\">Unit Linked Insurance Plans (ULIPs)\u003C/a> combine Life Insurance with investment opportunities. A portion of the premium goes toward life coverage. At the same time, the remainder is invested in various funds, such as equity, debt, or hybrid funds, allowing the policyholder to potentially earn market-linked returns. ULIPs allow switching between funds based on your risk appetite and market conditions. Shriram Life provides a handy ULIP calculator, which helps you estimate return and maturity value.\u003C/p>\u003Ch2>\u003Cstrong>Endowment Plans\u003C/strong>\u003C/h2>\u003Cp>Endowment Plans such as New Shri Life Plan are designed to provide both Life Insurance and a savings component. These plans provide a guaranteed payout either on maturity or in the event of death, whichever comes first. They provide moderate savings along with life coverage. While Endowment Plans typically have higher premiums than Term Insurance, they provide a more balanced combination of insurance and savings. Shriram Life's \u003Ca href=\"https://www.shriramlife.com/blog/advice/what-is-an-endowment-plan-in-life-insurance\" target=\"_blank\">Endowment Plans\u003C/a> allow policyholders to build savings while ensuring financial protection for their loved ones.\u003C/p>\u003Ch2>\u003Cstrong>Child Insurance Plans\u003C/strong>\u003C/h2>\u003Cp>Child Insurance plans are designed to secure a child’s financial future, especially for education needs. These plans combine Life Insurance with savings, providing a maturity benefit that can be used for the child’s education or other future needs. Shriram Life provides \u003Ca href=\"https://www.shriramlife.com/life-insurance/child-plan\" target=\"_blank\">Child Insurance plans\u003C/a> that ensure financial protection for your child's future, helping you save for important milestones like education while providing life coverage.\u003C/p>\u003Ch2>\u003Cstrong>Retirement Plans\u003C/strong>\u003C/h2>\u003Cp>Retirement or pension plans are designed to provide a regular income after retirement. These plans provide life cover during the accumulation phase and a steady income stream once the policyholder retires. Retirement plans ensure financial security in the later years of life. \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">Shriram Life’s retirement plans\u003C/a> are tailored to help you build a corpus during your working years, ensuring a reliable income post-retirement.\u003C/p>\u003Ch2>\u003Cstrong>The Role of Life Insurance in Financial Planning\u003C/strong>\u003C/h2>\u003Cp>As a cornerstone of financial planning, a Life Insurance policy provides,\u003C/p>\u003Col>\u003Cli>Income replacement for your family\u003C/li>\u003Cli>Funds to cover outstanding debts and mortgages\u003C/li>\u003Cli>Money for your children's education expenses\u003C/li>\u003Cli>Resources for your spouse's retirement planning\u003C/li>\u003Cli>A financial cushion to fall back whenever you’re financially down\u003C/li>\u003C/ol>\u003Cp>That’s not where the benefit ends. A Life Insurance policy provides you with a measurable goal to work towards. It helps you focus on a clear objective—protecting your loved ones' financial future in your absence. A Life Insurance policy doesn’t need much money to start. For instance, the \u003Ca href=\"https://www.shriramlife.com/life-insurance/early-cash-plan\" target=\"_blank\">Shriram Life Early Cash Plan\u003C/a> provides a cash bonus from your first policy anniversary until the end of your policy term. With the minimum sum assured being ₹1,50,000, it requires only a small part of your earnings. A Life Insurance plan is a foundational financial net since it jumpstarts your savings and improves your budgeting habits.\u003C/p>\u003Cp>Psychologically, a good Life Insurance plan gives you considerable peace of mind since there is always an emergency fund you can fall back on. It also teaches you to make thoughtful investing decisions instead of moving haphazardly.\u003C/p>\u003Ch2>\u003Cstrong>Achieving Financial Goals with Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Life Insurance can secure your investment and support your various financial goals. Here’s how\u003C/p>\u003Ch3>\u003Cstrong>1. Retirement Planning\u003C/strong>\u003C/h3>\u003Cp>Life Insurance helps your retirement planning by providing protection and providing a means to build wealth for the future. For instance, the \u003Ca href=\"https://www.shriramlife.com/life-insurance/pension-plus\" target=\"_blank\">Shriram Life Pension Plus plan\u003C/a> can convert premium payments into a regular income stream during retirement, ensuring financial stability in your non-working years. Life Insurance policies are typically low-risk, ensuring guaranteed payouts and building a substantial retirement corpus. Additionally, Life Insurance addresses one of the biggest concerns of retirees: healthcare expenses, by helping cover medical costs for emergencies and preventive care. Moreover, Shriram Life Insurance plans provide tax benefits under Sections 80C and 10(10D) of the Income Tax Act, further maximizing your retirement savings.\u003C/p>\u003Ch3>\u003Cstrong>2. Savings for major life events\u003C/strong>\u003C/h3>\u003Cp>Using a general Life Insurance plan to save for significant expenses like your child's education, wedding, and other major life events is a viable strategy. Life Insurance policies, particularly endowment policies such as the \u003Ca href=\"https://www.shriramlife.com/life-insurance/new-shri-life-plan\" target=\"_blank\">New Shri Life Plan\u003C/a>, are designed for long-term savings and can help you accumulate a corpus over the years that can be used for these purposes. Additionally, the maturity benefits are tax-free under Section 10(10D), making it a tax-efficient way to save for your child's future. Many Life Insurance policies also provide a loan facility against the policy's surrender value, which can be helpful if you need immediate funds for education or wedding expenses without surrendering the policy. Depending on the type of policy, you can choose flexible payout options, such as a lump sum at maturity or periodic payments that align with milestones like your child's education or wedding.\u003C/p>\u003Ch3>\u003Cstrong>3. Wealth creation and investment\u003C/strong>\u003C/h3>\u003Cp>Life Insurance is often seen primarily as a financial backup, especially in the case of Term Insurance plans. However, Life Insurance can also be a powerful tool for investment and savings. It can help with capital appreciation and preservation, supporting your future financial goals. Life Insurance plans provide various benefits, including guaranteed life protection, tax savings, assured income, and both market and non-market-linked returns, making them versatile tools for achieving different financial objectives. You can use Life Insurance for goal-based investments, such as funding your child’s education, planning for retirement, purchasing a home, building emergency funds, and more. The key advantage of using Life Insurance for investments or savings is the flexibility to choose options that align with your risk appetite and investment budget. With various choices available, you can find a plan that best suits your needs. \u003C/p>\u003Ch2>\u003Cstrong>Benefits of Life Insurance for Long-Term Financial Security\u003C/strong>\u003C/h2>\u003Cp>Life Insurance provides significant benefits for long-term financial security, making it an essential tool for individuals looking to safeguard their family's future. In addition to providing financial protection, Life Insurance also provides attractive tax benefits. Premiums paid towards Life Insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act, reducing your taxable income. Furthermore, the maturity benefits or death benefit received by beneficiaries are generally tax-free under Section 10(10D), enhancing the overall value of your Life Insurance policy.\u003C/p>\u003Cp>Life Insurance also provides the opportunity to accumulate cash value over time, particularly in permanent Life Insurance policies such as whole and universal life. A portion of your premium goes towards building this cash value, which grows over time. Once you have accumulated enough cash value, you can access it through policy loans, withdrawals, or even use it as collateral for loans. These loans are typically flexible, allowing you to repay at your own pace. However, it’s important to note that if the loan exceeds the cash value or remains unpaid, it could affect your policy's status or reduce the death benefit.\u003C/p>\u003Cp>Furthermore, the cash value component can be used as a financial resource in times of need. You can withdraw funds from your policy for personal expenses or take a loan against the cash value to cover significant life events such as education or medical costs. While taking loans or withdrawals may reduce the death benefit, the ability to tap into the accumulated cash value provides added financial flexibility and helps support long-term goals like retirement or other large expenses.\u003C/p>\u003Ch2>\u003Cstrong>Real-Life Examples and Case Studies\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>1. Aditya Sharma’s Family and the Importance of Life Insurance (India)\u003C/strong>\u003C/h3>\u003Cp>Aditya Sharma, a professional from Kanpur, shares the pivotal role Life Insurance played in his family's financial security. His father, a disciplined saver, had always emphasized the importance of planning for unexpected events. Early in life, he chose a Life Insurance policy that would provide the necessary funds for the family in case something happened to him. Tragically, when Aditya’s father passed away, the Life Insurance policy was settled and provided critical financial support. Aditya and his brother were still in school, and this timely settlement ensured their education and living expenses were taken care of during the uncertain years that followed. Aditya credits this decision as the smartest financial move his father made, as it shielded the family from the harsh consequences of his untimely death.\u003C/p>\u003Ch2>\u003Cstrong>Choosing the Right Life Insurance Plan\u003C/strong>\u003C/h2>\u003Cp>When selecting a Life Insurance policy, making an informed decision that aligns with your financial goals is essential.\u003C/p>\u003Cp>\u003Cstrong>Here’s a walkthrough to help you choose the best policy:\u003C/strong>\u003C/p>\u003Cp>1. What are your financial goals: Are you securing your family’s financial future, saving for education, or ensuring retirement income? The right policy for you depends on your goals. \u003C/p>\u003Cp>2. To ensure your family’s needs are met, choose coverage at least 10-12 times your annual income, accounting for debts, liabilities, and future expenses. For instance, the \u003Ca href=\"https://www.shriramlife.com/life-insurance/assured-income-plan\" target=\"_blank\">Assured Income Plan\u003C/a> provides guaranteed income with a low premium payment.\u003C/p>\u003Cp>3. While affordability is important, ensure you’re getting adequate coverage and policy benefits. \u003Ca href=\"http://shriramlife.com/\" target=\"_blank\">Shriram Life Insurance\u003C/a> has multiple plans that help you choose the best one for you.\u003C/p>\u003Cp>4. The term should match the period your family will financially depend on you. For Term Insurance, subtract your current age from the age you expect to stop earning or achieve a major life goal.\u003C/p>\u003Cp>5. Select the Right Policy:\u003C/p>\u003Cul>\u003Cli>\u003Cstrong>Term Insurance:\u003C/strong> High coverage at affordable rates for a set period.\u003C/li>\u003Cli>\u003Cstrong>Endowment Plans:\u003C/strong> Combines Life Insurance with a savings component, providing a lump sum at maturity.\u003C/li>\u003Cli>\u003Cstrong>ULIPs:\u003C/strong> Flexible with investment options for long-term wealth accumulation.\u003C/li>\u003Cli>\u003Cstrong>Whole Life Insurance:\u003C/strong> Provides lifelong coverage with a cash value component.\u003C/li>\u003C/ul>\u003Cp>6. Your age, health, and lifestyle (e.g., smoking, drinking) influence premium costs. Younger, healthier individuals typically pay lower premiums.\u003C/p>\u003Cp>7. Know more about riders and other add-on benefits. For instance, riders like critical illness, accidental death, or waiver of premium can provide additional coverage, though they may increase your premium.\u003C/p>\u003Cp>8. Carefully read the policy details, including exclusions and limitations, to avoid surprises and ensure full transparency.\u003C/p>\u003Cp>9. If your policy includes a cash value component, know how it grows. This can be a valuable wealth-building tool over time.\u003C/p>\u003Cp>10. If you’re unfamiliar with Life Insurance, consider consulting a Shriram Life Insurance advisor to help you choose the most suitable policy based on your needs and financial goals.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>To summarize, Life Insurance is a critical component of long-term financial planning, providing benefits such as income replacement, debt coverage, and savings for major life events. Whether you're looking to protect your family's future, save for retirement, or accumulate wealth, there’s a Life Insurance policy to suit your needs. By carefully evaluating your financial goals, coverage amount, policy term, and type of policy, you can ensure that your Life Insurance choice aligns with your personal and family goals.\u003C/p>\u003Cp>We encourage you to consult with a financial advisor or Shriram Life Insurance expert today to make an informed decision tailored to your specific situation. Life Insurance isn’t just about protection—it’s a strategic tool to help secure your financial future. With products like the Shriram Life Assured Income Plan (AIP), you can enjoy guaranteed regular income, flexible policy terms, and the potential for bonus payouts, ensuring a steady income stream for the future. Additionally, the Shriram Early Cash Plan (ECP) combines life coverage with savings, providing dual financial protection benefits, a lump sum payout at maturity, and tax-saving advantages. Both plans are designed to help you achieve long-term financial goals while providing flexible premium payment options, making them ideal for securing your family’s future.\u003C/p>\u003Cp>Start planning today for a more secure tomorrow!\u003C/p>","category":"/blog/advice"},{"title":"How to Choose Beneficiaries for Your Life Insurance Policy?","heading":"How to Choose Beneficiaries for Your Life Insurance Policy?","short_description":"\u003Cp>People buy Life Insurance policies to secure their family’s and other dependent’s financial future in the event of their untimely death.\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2025-01/2.How%20to%20Choose%20Beneficiaries%20for%20Your%20Life%20Insurance%20Policy%20copy_0.webp?VersionId=oYq9U3B7o2fe0Bcrj0atDARCaajf.t.U","alt":"Choosing beneficiary for life insurance"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2025-01-03T12:40:33","updated_on":"2025-01-03T12:40:39","read_more_title":"Know More","slug":"/how-to-choose-beneficiaries-for-your-life-insurance-policy","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/insurance-policy\" hreflang=\"en\">Insurance Policy\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>","description":"\u003Cp>People buy Life Insurance policies to secure their family’s and other dependent’s financial future in the event of their untimely death. However, the policy benefits can be useless to the family if the policyholder doesn’t appoint the correct insurance beneficiaries.\u003C/p>\u003Cp>If you want your family to live comfortably and meet all financial needs smoothly in case of the unfortunate event of your demise, then you must choose beneficiaries and add them to your policy when you purchase the plan. This Life Insurance guide covers more about beneficiaries, so your family doesn’t struggle with claiming the policy’s death benefits.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Beneficiaries\u003C/strong>\u003C/h2>\u003Cp>Before you proceed with naming beneficiaries in your policy, first understand who is eligible to become one. While most people choose individuals like their spouse, children, dependent parents, or other family members as insurance beneficiaries, some also choose a trust, business partner, or other entities.\u003C/p>\u003Cp>A Life Insurance policy beneficiary is legally entitled to receive the sum assured if a policyholder dies during the policy tenure. Before assigning beneficiary rights to anyone, remember that the beneficiaries in Life Insurance are of primarily two types:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Primary Life Insurance Beneficiary\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>A primary beneficiary is an individual who is legally entitled to receive the policy proceeds in the unfortunate event of a policyholder’s death. However, no proceeds can be claimed in his name if the primary beneficiary dies before the policyholder.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Secondary Life Insurance Beneficiary\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Also known as a contingent Life Insurance beneficiary, a secondary beneficiary refers to the individual who can claim policy proceeds if the primary beneficiary dies. There is a catch with contingent beneficiaries. They can only receive the beneficiary rights if the primary beneficiary dies before the policyholder.\u003C/p>\u003Ch2>\u003Cstrong>Factors to Consider When Choosing Beneficiaries\u003C/strong>\u003C/h2>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Family Members\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>When choosing Life Insurance beneficiaries, you must consider the family members dependent on you. A spouse, children, parents, siblings, and other relatives are common beneficiary choices. Consider the severity of the financial impact your family members may face in your absence, and choose the beneficiary accordingly. You can explore our \u003Ca href=\"https://www.shriramlife.com/life-insurance/savings-plan\" target=\"_blank\">Savings Plans\u003C/a>, \u003Ca href=\"https://www.shriramlife.com/life-insurance/protection-plan\" target=\"_blank\">Protection Plans\u003C/a>, and \u003Ca href=\"https://www.shriramlife.com/life-insurance/investment-plan\" target=\"_blank\">Investment Plans\u003C/a> to diversify and strengthen your financial well-being.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Financial Dependents\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can choose people financially dependent on you as the insurance beneficiaries. Parents, spouse, and children can only be listed in this case.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Charitable Organizations\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>If you want to give the policy proceeds to a trust or charitable organization, you must list its trustee as the beneficiary. The trustee can later claim the policy’s sum insured after your death.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Legal and Financial Implications\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Adding your family members or entities as beneficiaries in a Life Insurance Policy will give them legal rights to claim policy proceeds. They can receive direct payout into their account by avoiding potential legal complications like lengthy probate proceedings, complex estate planning proceedings, and other challenges. Beneficiaries will be subject to tax implications, depending on who the beneficiary is.\u003C/p>\u003Cp>For example, if a policyholder lists an estate as the beneficiary, their heirs must pay estate taxes. But if the beneficiary is a family member, then the death proceeds will be tax-free. If you invest in our \u003Ca href=\"https://www.shriramlife.com/life-insurance/early-cash-plan\" target=\"_blank\">Shriram Life Early Cash Plan\u003C/a> or other \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">Retirement Plans\u003C/a>, your spouse, children, parents, or other individual beneficiaries will receive tax benefits along with other advantages like returns powered by compounding, cash bonuses, etc.\u003C/p>\u003Ch3>\u003Cstrong>Updating Beneficiaries\u003C/strong>\u003C/h3>\u003Cp>Naming beneficiaries and updating them is crucial because it ensures the right beneficiaries receive the policy’s death benefits without any challenges. You shouldn’t add the beneficiary once and forget if you have a Life Insurance Policy. For example, if you purchased the policy when you were single, you would have listed your parents as the primary beneficiaries.\u003C/p>\u003Cp>But after your marriage, you must also include your spouse in the beneficiary list. Children can also be included after you become a parent. Similarly, you will need a beneficiary change in case of the unfortunate demise of the previously listed beneficiaries or the event of an unexpected event such as legal separation/divorce of spouses. It is important to plan your beneficiary list and update them as needed.\u003C/p>\u003Ch2>\u003Cstrong>Common Mistakes to Avoid\u003C/strong>\u003C/h2>\u003Cp>Some policyholders unknowingly make mistakes while listing their Life Insurance beneficiaries, leading to disputes during claim processing. If you don’t want your family to experience something similar, ensure you avoid making the following common mistakes.\u003C/p>\u003Ch3>\u003Cstrong>Naming a Minor as Beneficiary\u003C/strong>\u003C/h3>\u003Cp>If you list children aged below 18 as your beneficiaries and you die before they become adults, then insurance companies will not give policy proceeds to them. You can list a legal guardian or custodian for the child to manage money on your child’s behalf until your kids reach 18 years of age.\u003C/p>\u003Ch3>\u003Cstrong>Not Being Specific\u003C/strong>\u003C/h3>\u003Cp>Policyholders who have children from their previous marriage and current marriage should be specific while listing their beneficiaries. Instead of listing ‘my children’ as beneficiaries, mention the name of the children for clarity. It will avoid confusion at a later stage. The specificity rule should be followed by every policyholder, especially by people with complex family dynamics.\u003C/p>\u003Ch3>\u003Cstrong>Not Selecting a Contingent Beneficiary\u003C/strong>\u003C/h3>\u003Cp>Life is unpredictable, so you must choose beneficiaries accordingly. Instead of only choosing a primary beneficiary, list a contingent (secondary) beneficiary to ensure policy proceeds are received even if the primary beneficiary dies before the policyholder.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>People invest in Life Insurance policies so their dependents don’t face financial hardships after their death. However, the intended purpose of policy purchase cannot be fulfilled if the right beneficiaries aren’t listed in the policies. If you want your family or other dependents to live a life of ease and comfort when you’re not around, always list rightful beneficiaries. You must also review and update them from time to time, especially after events like a wedding, childbirth, divorce, etc.\u003C/p>\u003Cp>If you have finalized your beneficiaries and are looking for good policies to secure your family’s financial future, consider exploring our \u003Ca href=\"https://www.shriramlife.com/life-insurance/assured-income-plan\" target=\"_blank\">Shriram Life Assured Income Plan\u003C/a>. It features multiple benefits, such as assured income, additional protection, higher benefits for higher premiums, etc. You can contact \u003Ca href=\"https://www.shriramlife.com/\" target=\"_blank\">Shriram Life Insurance\u003C/a> to seek guidance in choosing the right plan aligned with your financial goals.\u003C/p>","category":"/blog/advice"},{"title":"What is Life Insurance and How Does It Work?","heading":"What is Life Insurance and How Does It Work?","short_description":"\u003Cp>Life insurance is a type of financial protection you buy to support your loved ones if something happens to you.\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2025-01/1.What%20is%20Life%20Insurance%20and%20How%20Does%20It%20Work__0.jpeg?VersionId=Xi69AartuVivJOMki1QrAFRIyI9QaDVU","alt":"What is Life Insurance and How does it work?"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2025-01-02T12:05:36","updated_on":"2025-01-02T12:05:42","read_more_title":"Know More","slug":"/what-is-life-insurance-and-how-does-it-work","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/insurance-policy\" hreflang=\"en\">Insurance Policy\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>","description":"\u003Cp>Life insurance is a type of financial protection you buy to support your loved ones if something happens to you. It’s a contract between you and an insurance company: you pay a certain amount of money (called a premium) regularly, and in return, the insurance company promises to pay a certain sum of money (called a death benefit) to your beneficiaries in case of the unfortunate event of death.\u003C/p>\u003Cp>Life insurance aims to provide financial support to people who depend on you (the beneficiaries), such as your family, in the unfortunate case of you no longer being there to provide for them. There are different types of life insurance, but the basic idea is to ensure your family won't struggle financially after you’re gone. In this article, let us see how life insurance works and what are the different criteria needed to get life insurance for you and your family members.\u003C/p>\u003Ch2>\u003Cstrong>What Is Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Now that we understand what Life Insurance Policy is, consider the following example.\u003C/p>\u003Cp>Let us assume that Mr. Yash buys a Life Insurance Policy from \u003Ca href=\"https://www.shriramlife.com/\" target=\"_blank\">Shriram Life Insurance\u003C/a>. He opts for a 20-year term policy with a sum assured of ₹10 lakhs and agrees to pay an annual premium of ₹25,000 for the full 20 years.\u003C/p>\u003Cp>Here’s how his policy would work:\u003C/p>\u003Ch3>\u003Cstrong>If Mr. Yash completes the Policy Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>Over the 20 years, he has paid a total of ₹5 lakhs in premiums.\u003C/li>\u003Cli>At the end of the 20 years, Mr. Yash will receive the maturity benefit of ₹10 lakhs (the sum assured) plus any bonus or investment returns if applicable.\u003C/li>\u003Cli>The policy will end once the maturity benefit is paid out.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>In case of the unfortunate demise of Mr. Yash Dies during the 10th Policy Year\u003C/strong>\u003C/h3>\u003Col>\u003Cli>By the 10th year, Mr. Yash has paid a total of ₹2.5 lakhs in premiums.\u003C/li>\u003Cli>In the unfortunate case of his death, his family or nominees will receive ₹10 lakhs (the sum assured) plus any bonus (if applicable).\u003C/li>\u003Cli>The policy will terminate after the death benefit is paid.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>If Mr. Yash opts for Premium Protection in the Policy\u003C/strong>\u003C/h3>\u003Col>\u003Cli>In the unfortunate event of Mr. Yash passing away in the 10th year, his family will receive the death benefit of ₹10 lakhs immediately.\u003C/li>\u003Cli>The policy will continue accumulating the investment value, typically linked to the insurer's fund performance.\u003C/li>\u003Cli>At the end of the 20-year term, the insurer will pay the promised maturity benefit of ₹10 lakhs (sum assured) plus any applicable bonus to the beneficiaries or as a lump sum to Mr. Yash’s family.\u003C/li>\u003C/ol>\u003Ch2>\u003Cstrong>Types of Life Insurance\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Term Life Insurance\u003C/strong>\u003C/h3>\u003Cp>Term Life Insurance is a type of life insurance policy that provides coverage for a specific period, typically 10 to 30 years. When you purchase a term life insurance policy, you agree to pay premiums for the duration of the term. In return, the insurance company will provide a benefit to your beneficiaries if an unfortunate event occurs during the policy term. Term Life Insurance is often more affordable than permanent insurance, making it an attractive option for people who want financial protection for their loved ones without high costs. For instance, the \u003Ca href=\"https://www.shriramlife.com/life-insurance/online-term-plan\" target=\"_blank\">Shriram Online Term Plan\u003C/a> provides women with great payout options, superior coverage, and lower premium options.\u003C/p>\u003Cp>The main benefits of Term Life Insurance \u003Cspan>such as \u003C/span>\u003Ca href=\"https://www.shriramlife.com/life-insurance/family-protection-plan\">\u003Cspan>Shriram Life Family Protection Plan\u003C/span>\u003C/a>\u003Cspan> \u003C/span>are its affordability, flexibility, and financial protection for your family. It provides your beneficiaries with a lump sum or income if you die during the policy term. You can also add riders to your policy for extra coverage, such as protection for critical illness or accidental death. Additionally, the premiums for Term Life Insurance may be tax-deductible, and your family's death benefit is generally tax-free.\u003C/p>\u003Ch3>\u003Cstrong>Whole Life Insurance\u003C/strong>\u003C/h3>\u003Cp>Whole Life Insurance is a type of life insurance that provides coverage for your entire lifetime as long as you continue to pay the premiums. It combines a death benefit with a cash value component, which grows over time. One of the key benefits of Whole Life Insurance is the cash value, which accumulates on a tax-deferred basis. This cash value can be borrowed against or withdrawn for various needs or even used to pay premiums. Additionally, it provides a tax-free benefit to your beneficiaries. However, whole life insurance requires a long-term commitment. So, it is prudent to speak with a financial professional before opting for one.\u003C/p>\u003Ch2>\u003Cstrong>What Affects Your Life Insurance Premiums and Costs?\u003C/strong>\u003C/h2>\u003Cp>Several factors determine your life insurance premiums, reflecting the insurer's assessment of your risk profile. Key factors include:\u003C/p>\u003Ch3>\u003Cstrong>1. Age\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>Younger individuals pay lower premiums due to a lower risk of early death and fewer health issues.\u003C/li>\u003Cli>Older individuals face higher premiums due to increased health risks.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>2. Health\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Current health: \u003C/strong>Healthier individuals pay lower premiums, while those with chronic conditions face higher costs.\u003C/li>\u003Cli>\u003Cstrong>Family medical history:\u003C/strong> A history of hereditary diseases may increase premiums.\u003C/li>\u003Cli>\u003Cstrong>BMI: \u003C/strong>A healthy BMI can reduce premiums, as obesity increases health risks.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>3. Lifestyle\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Smoking: \u003C/strong>Smokers pay higher premiums due to the risk of smoking-related illnesses.\u003C/li>\u003Cli>\u003Cstrong>Alcohol: \u003C/strong>Excessive drinking raises premiums due to risks like liver disease.\u003C/li>\u003Cli>\u003Cstrong>Risky activities:\u003C/strong> Engaging in high-risk hobbies or jobs increases premiums due to accident potential.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>4. Gender\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>Women generally pay lower premiums due to longer life expectancy.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>5. Policy Details\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Coverage amount: \u003C/strong>Higher coverage and permanent policies result in higher premiums due to extended benefits.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>6. Occupation\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>High-risk jobs: \u003C/strong>Dangerous professions, such as construction or aviation, lead to higher premiums.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Life Insurance Buying Guide\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Step-by-Step Guide to Purchasing Life Insurance:\u003C/strong>\u003C/h3>\u003Ch4>Step 1: Calculate How Much Coverage You Need\u003C/h4>\u003Cp>Start by estimating how much life insurance your family will need. A common rule is \u003C/p>\u003Cp>Coverage = (Annual Income × 10–15) + Debts + Future Costs + Living Expenses − Savings − Investments\u003C/p>\u003Cp>This ensures your family can maintain their lifestyle and meet financial needs if something happens to you. You can visit Shriram Life Insurance plans to see which plans would suit your financial goals better.\u003C/p>\u003Ch4>Step 2: Gather Documents for Your Application\u003C/h4>\u003Cp>Prepare essential documents like a photo ID, address proof, and social security number (your Aadhar number). Collect medical history details, including existing conditions, medications, and surgeries. Have information about your job, income, and financial situation ready, such as pay stubs and tax returns. If you already have life insurance policies, keep those details on hand. Be honest, as inaccuracies can delay approval.\u003C/p>\u003Ch4>Step 3: Compare Policy Options\u003C/h4>\u003Cp>Request quotes from different insurers. Don’t just look at the price—compare coverage, benefits, and the company’s reliability. Understand the differences between term life, whole life, and universal life policies. Look into riders, conversion options, and potential premium changes. A financial advisor can help you pick a policy that balances affordability with strong coverage for your family.\u003C/p>\u003Ch2>\u003Cstrong>Who can benefit from a life insurance policy?\u003C/strong>\u003C/h2>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cstrong>Key Group\u003C/strong>\u003C/td>\u003Ctd>\u003Cstrong>Explanation\u003C/strong>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Families\u003C/td>\u003Ctd>Life insurance can ensure financial security for your spouse and children, especially if you are the primary income earner.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Individuals with Debts\u003C/td>\u003Ctd>If you have significant debts, life insurance can help pay them off, preventing financial hardship for your loved ones.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd rowspan=\"4\">Business Owners\u003C/td>\u003Ctd>Life insurance can be used to:\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Protect business continuity: Provide funds to replace key employees or cover business debts.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Fund buy-sell agreements: Ensure a smooth transition of ownership in the event of a partner's death.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Provide liquidity for estate taxes: Pay estate taxes and avoid forced asset sales.\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>What to Do Before Buying Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Before purchasing a Life Insurance Policy, it is important to analyze the death benefits and other financial obligations and goals. Let's break down the key factors:\u003C/p>\u003Ch3>\u003Cstrong>Immediate Needs\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Medical Bills: \u003C/strong>Any outstanding medical bills or final medical expenses should be accounted for.\u003C/li>\u003Cli>\u003Cstrong>Debt Repayment:\u003C/strong> This includes mortgages, car loans, credit card debt, and other outstanding loans.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>Long-Term Needs.\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Income Replacement:\u003C/strong> Calculate the income your family relies on and determine how long they might need that income.\u003C/li>\u003Cli>\u003Cstrong>Childcare Costs: \u003C/strong>If you have young children, factor in the cost of childcare until they reach adulthood.\u003C/li>\u003Cli>\u003Cstrong>Education Costs: \u003C/strong>Consider tuition, fees, and living expenses for your children's education.\u003C/li>\u003Cli>\u003Cstrong>Retirement Savings: \u003C/strong>If your death could impact your spouse's \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">retirement plans\u003C/a>, factor in the amount needed to maintain their desired lifestyle.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>A More Detailed Approach\u003C/strong>\u003C/h3>\u003Cp>While the 10-15 times annual income rule is a useful starting point, a more accurate assessment involves a detailed financial analysis.\u003C/p>\u003Cp>Here's a suggested approach:\u003C/p>\u003Cp>1. \u003Cstrong>Create a Financial Inventory:\u003C/strong> List all your assets, debts, and monthly expenses.\u003C/p>\u003Cp>2. \u003Cstrong>Estimate Future Expenses: \u003C/strong>Project future costs, such as college tuition and retirement savings.\u003C/p>\u003Cp>3. \u003Cstrong>Consider Inflation: \u003C/strong>Account for the rising cost of living over time.\u003C/p>\u003Cp>4. \u003Cstrong>Consult a Financial Advisor: \u003C/strong>A professional can help you assess your needs and recommend the appropriate coverage.\u003C/p>\u003Ch2>\u003Cstrong>How Life Insurance Works\u003C/strong>\u003C/h2>\u003Cp>\u003Cstrong>Death Benefit: \u003C/strong>The core component of life insurance is the death benefit, a lump sum payment made to your beneficiaries upon death. This payment can help cover final expenses, and debts, and provide ongoing financial support for your loved ones.\u003C/p>\u003Cp>\u003Cstrong>Premium: \u003C/strong>A premium is the regular payment you make to the insurance company to maintain your policy. The premium amount is determined by several factors, including:\u003C/p>\u003Cul>\u003Cli>Age\u003C/li>\u003Cli>Health\u003C/li>\u003Cli>Occupation\u003C/li>\u003Cli>Lifestyle\u003C/li>\u003Cli>Policy Type\u003C/li>\u003C/ul>\u003Cp>\u003Cstrong>Cash Value (Permanent Life Insurance Only):\u003C/strong> A portion of your premium in a permanent life insurance policy accumulates over time, creating a cash value. \u003C/p>\u003Cp>This cash value can be:\u003C/p>\u003Cul>\u003Cli>\u003Cstrong>Borrowed Against: \u003C/strong>You can borrow against the cash value, but interest will accrue on the loan.\u003C/li>\u003Cli>\u003Cstrong>Withdrawn: \u003C/strong>You can withdraw funds from the cash value, which may reduce the death benefit.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Life Insurance Riders and Policy Changes\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Policy Customizations:\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Riders:\u003C/strong> Additional coverage options that can be added to your policy, such as:\u003Cul>\u003Cli>Accidental Death Benefit.\u003C/li>\u003Cli>Critical Illness Rider.\u003C/li>\u003Cli>Long-Term Care Rider.\u003C/li>\u003Cli>Waiver of Premium Rider.\u003C/li>\u003C/ul>\u003C/li>\u003Cli>\u003Cstrong>Policy Changes:\u003C/strong> You may be able to make changes to your policy, such as increasing or decreasing the death benefit or adding or removing riders.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Qualifying for Life Insurance\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Eligibility Criteria:\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Age:\u003C/strong> Most insurers have minimum and maximum age limits.\u003C/li>\u003Cli>\u003Cstrong>Health: \u003C/strong>Your health history and current health condition can affect your eligibility and premium rates.\u003C/li>\u003Cli>\u003Cstrong>Occupation: \u003C/strong>Hazardous occupations may require additional underwriting or higher premiums.\u003C/li>\u003Cli>\u003Cstrong>Lifestyle: \u003C/strong>Factors like smoking and excessive alcohol consumption can impact your eligibility.\u003C/li>\u003C/ul>\u003Cp>In conclusion, life insurance is a valuable tool for financial security. By understanding the different types of policies, factors affecting premiums, and the steps involved in purchasing life insurance, you can make informed decisions to protect your loved ones. Remember to assess your specific needs, compare policies from different insurers, and consult a financial advisor to ensure you have the right coverage. By taking these steps, you can know that your family's financial future is secure.\u003C/p>","category":"/blog/advice"},{"title":"Tax Saving Benefit: How Life Insurance Can Help You Save","heading":"Tax Saving Benefit: How Life Insurance Can Help You Save","short_description":"\u003Cp>People invest in Life Insurance to financially secure their family, in case of unfortunate circumstances of them not being there.\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2025-01/46.%20Tax%20Saving%20Benefit_%20How%20Life%20Insurance%20Can%20Help%20You%20Save_0.png?VersionId=D6uTTAJ02IyULHL7CkAhId58AlT2k4He","alt":"Tax Saving Benefit: How Life Insurance Can Help You Save"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2025-01-01T09:20:58","updated_on":"2025-01-01T09:21:05","read_more_title":"Know More","slug":"/how-life-insurance-can-help-you-save-tax","field_bl_tag":"\u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/savings\" hreflang=\"en\">Savings\u003C/a>, \u003Ca href=\"/blog/guides/insurance-policy\" hreflang=\"en\">Insurance Policy\u003C/a>, \u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>","description":"\u003Cp>People invest in Life Insurance to financially secure their family, in case of unfortunate circumstances of them not being there. However, this investment also provides Life Insurance tax benefits. You can enjoy plenty of tax benefits if you strategize your investments and choose the right Life Insurance, sum assured, and premium amount. This blog explains how policyholders can reduce tax liabilities and optimize returns using the right tax-saving strategies. \u003C/p>\u003Ch2>\u003Cstrong>What is Life Insurance and How Does it Work?\u003C/strong>\u003C/h2>\u003Cp>Before we get into the details of Life Insurance tax benefits, let’s start by understanding what Life Insurance is and how it works. If you’re beginning your investment journey, start by choosing the right Life Insurance Plan. This plan takes care of your family’s financial future in case of your death. \u003C/p>\u003Cp>You pay premiums for a specific period determined in the policy, and in return, the insurer releases the accumulated funds in the form of maturity or death proceeds. Many people include Life Insurance in financial planning because it provides dual tax savings and financial security benefits. At Shriram Life Insurance, we provide a wide range of \u003Ca href=\"https://www.shriramlife.com/life-insurance/savings-plan\" target=\"_blank\">savings plans\u003C/a> and \u003Ca href=\"https://www.shriramlife.com/life-insurance/protection-plan\" target=\"_blank\">protection plans\u003C/a> that feature insurance coverage paired with other benefits.\u003C/p>\u003Ch2>\u003Cstrong>What are the Life Insurance Tax Benefits?\u003C/strong>\u003C/h2>\u003Cp>All Life Insurance policies in India enable policyholders to save taxes by deducting the amount paid towards premiums in their income tax returns. These tax deductible premiums help lower tax liability for a particular financial year while accumulating Life Insurance coverage benefits for their family. \u003C/p>\u003Cp>If you want to do strategic tax planning with Life Insurance, always remember that tax benefits are available in two forms: Tax deductions and tax exemptions.\u003C/p>\u003Cp>\u003Cstrong>Tax deductions \u003C/strong>refer to the amount you can deduct from your Gross Total Income (GTI) while filing the income tax return. It can significantly reduce the amount of tax payable. Tax deductible premiums can be claimed under different sections of the Income Tax, 1961, which are covered later in this article.\u003C/p>\u003Cp>\u003Cstrong>Tax exemptions\u003C/strong> are another important aspect of tax benefits. Tax exemptions refer to the part of your insurance earnings or proceeds that are naturally exempted from tax. For instance, tax-free death benefits come under tax exemption, not deduction. \u003C/p>\u003Ch2>\u003Cstrong>How to Save Income Tax with a Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>The multiple features of Life Insurance for saving are frequently discussed among working individuals, but its tax benefits aren’t talked about enough. If you have an insurance policy or are planning to buy one, you can enjoy tax savings at the following stages:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Entry Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>At this stage, you can deduct the amount paid towards the policy’s premium under relevant sections for tax savings. For example, if you have paid ₹ 50,000 as a Life Insurance premium in one financial year, you can claim the whole amount as deduction u/s 80C. It is among the most common tax-saving techniques for salaried employees and self-employed individuals. Tax savings through section 80C are for Life Insurance, 80D is for health insurance, and 80CCC is for pension plans. We will discuss these sections in detail later in this article. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Earnings Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Since most Life Insurance policies have a long-term tenure, your investment keeps growing because of the power of compounding. The best part is the earnings during this stage are non-taxable, provided you don’t withdraw them prematurely. If you invest in our unit-linked \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">retirement plans\u003C/a> or \u003Ca href=\"https://www.shriramlife.com/life-insurance/child-plan\" target=\"_blank\">child plans\u003C/a>, you can enjoy growth over a period without worrying about paying taxes on the earned amount. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Exclusive Switching Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can enjoy tax-free switching if you want to switch between your investments in unit-linked insurance plans. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Exit Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>It is the last stage of your policy, where you begin to receive payouts or proceeds from the insurer. Most proceeds are exempted from tax u/s 10 (10D), subject to certain conditions. You can get detailed information about 10(10D) tax benefits in the following section.\u003C/p>\u003Ch2>\u003Cstrong>Tax Benefits on Life Insurance Policies Under Different Sections of the Income Tax Act, 1961\u003C/strong>\u003C/h2>\u003Cp>You can get Life Insurance tax benefits under different yet relevant sections of the Income Tax Act, 1961. Most deductions fall under the following sections:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80C\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Policyholders can claim a deduction for the amount paid towards insurance premium u/s 80C, up to a maximum limit of ₹ 1.50 lakh per annum. The Tax Benefit of 80C can be availed if the premium exceeds 10% of the policy’s sum assured amount, then tax will be levied proportionally. If you invest in our \u003Ca href=\"https://www.shriramlife.com/life-insurance/early-cash-plan\" target=\"_blank\">Shriram Life Early Cash Plan\u003C/a>, you can enjoy tax-deductible premiums u/s 80C. This plan provides life coverage with added benefits such as a cash bonus guarantee, wealth creation through compounding, capital guarantee, and more. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80D\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Policyholders who have invested in health insurance plans can claim the premium payment amount as a deduction u/s 80D. The deduction is capped at ₹25,000 per annum, but you can claim an additional ₹25,000 per annum if you’ve taken a policy for your parents. You can claim ₹50,000 per annum as a deduction if your parents are senior citizens.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 10(10D)\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>This section ensures that the proceeds received by nominees in case of the policyholder’s death are fully exempt from tax. Any attached incentives or surrendering value is also exempted from tax. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80CCC\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can claim deductions toward the premium paid for designated pension plans. The deductions are capped at a combined limit of ₹1.50 lakh per annum u/s 80C and 80CCD(1). If you surrender the policy prematurely, then the amount received on surrendering will be taxable as regular income. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 10 (10A)\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>The accumulated (commuted) pension amount received by government employees are exempted from tax u/s 10(10A). However, an uncommuted or monthly pension is taxable as a regular salary.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80CCE\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>This section limits the total eligible deduction amount to ₹1.50 lakh per annum for multiple policyholders. The limit includes combined total deductions u/s section 80C, 80CCC, and 80CCD(1). \u003C/p>\u003Ch2>\u003Cstrong>What are the Potential Tax Benefits on Riders of Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Riders are great tools to enhance the coverage of a standard Life Insurance policy, but they also contribute to tax savings. According to Section 80D, if you buy a term insurance plan with health-related riders like hospital care rider, critical illness, surgical care, etc., you can get a deduction of up to ₹25,000. You can get an additional ₹25,000 deduction limit on similar plans purchased for parents. \u003C/p>\u003Cp>This limit is further increased to ₹50,000 if you’re buying policies for parents aged 60+/senior citizens. Hence, always evaluate different tax saving strategies before investing in any plan. You must explore our \u003Ca href=\"https://www.shriramlife.com/life-insurance/premier-assured-benefit-plan\" target=\"_blank\">Shriram Life Premier Assured Benefit Plan\u003C/a> if you want to buy a Life Insurance that provides higher returns for higher premiums and also helps you save tax on riders. It is one of our best savings plans that also provide life coverage and various other benefits. \u003C/p>\u003Ch2>\u003Cstrong>What is TDS on Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>Tax Deducted at Source (TDS) is generally charged on eligible financial products, including insurance plans, potentially lowering the maturity proceeds. If you receive payouts of more than ₹1,00,000 upon policy maturity, then the insurer will deduct a 5% TDS before releasing the funds. No TDS on Life Insurance will be deducted if the amount is lower than ₹1,00,000.\u003C/p>\u003Cp>Additionally, no TDS will be deducted if the plan falls u/s 10(10D), premium payment doesn’t exceed 10% of the sum assured value (for policies purchased after 1st April 2021), or the amount is received u/s 80DD(3) or 80DDA(3). If you purchased the plan between 1st April 2003 and 31st March 2012, then TDS on Life Insurance won’t be deducted if the premium payments don’t exceed 20% of the policy’s total sum assured. \u003C/p>\u003Ch2>\u003Cstrong>What is GST on Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>Goods and Services Tax, a.k.a. GST, is an indirect tax imposed on certain goods and services. Policyholders pay a flat 18% GST on all insurance policy premiums. Previously, policyholders paid a 15% service tax, including the Krishi Kalyan cess and Swachh Bharat cess. It has not been replaced by GST. \u003C/p>\u003Ch3>\u003Cstrong>Eligibility Criteria to Claim Life Insurance Tax Benefits\u003C/strong>\u003C/h3>\u003Cp>Life Insurance tax benefits are available to all individuals and Hindu Undivided Families (HUFs). They can claim tax benefits on premium payments and maturity proceeds under relevant sections of the Income Tax Act, 1961. \u003C/p>\u003Ch3>\u003Cstrong>Tax Benefits for Single Premium Insurance Policies\u003C/strong>\u003C/h3>\u003Cp>Single premium insurance policies are also eligible for tax deductions u/s 80C. The premium paid on these policies can be claimed as a deduction u/s 80C. The only difference between single premium and multiple premium policies is that the former only gets one tax deduction in the payment year, whereas the policyholder can enjoy deductions on multiple premium payments every year. As discussed above, the maturity proceeds are taxed as any other insurance policy.\u003C/p>\u003Ch3>\u003Cstrong>Advantages and Tax Implications of Exiting a Life Insurance Policy\u003C/strong>\u003C/h3>\u003Cp>The biggest advantage of exiting a Life Insurance policy is getting instant funds to meet unexpected, immediate expenses. The tax implications will depend on the policy type, amount, number of premiums paid to date, how long you held the policy, and various other factors. \u003Cbr />For example, if you surrender an endowment insurance plan, you only enjoy tax benefits if you’ve paid the premiums for the first two years. In the case of ULIP, tax benefits will only apply if you surrender the policy after five years. So, always check the type of policy you have to determine the relevant tax implications. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Life Insurance is a must-have investment for every individual because it ensures the policyholder’s financial future is secured and stable. While these plans are primarily designed for financial security, they also provide tax benefits to all policyholders. You can use the information discussed in this article to plan effective tax savings strategies for optimal benefits. You can also invest in Shriram Life Insurance plans to enjoy dual benefits of life cover and tax benefits.\u003C/p>\u003Cp>If you want to build wealth over time while maintaining secure life coverage, then you must explore our \u003Ca href=\"https://www.shriramlife.com/life-insurance/assured-income-plan\" target=\"_blank\">Shriram Life Assured Income Plan\u003C/a>. It provides numerous benefits like flexible premiums, additional protection, assured income, etc., in addition to tax savings. We have various plans designed for protection, savings, retirement, etc., so explore all and invest in the ones that seamlessly align with your financial goals.\u003C/p>","category":"/blog/advice"},{"title":"What are the different types of investments in India? How do they work?","heading":"What are the Different Types of Investments in India? How do they Work?","short_description":"\u003Cp>Investing in the right financial products and plans is the wisest way to build wealth over time, outpace inflation, and achieve your financial goal\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2024-12/42.%20What%20are%20the%20different%20types%20of%20investments%20in%20India_%20How%20do%20they%20work__0.png?VersionId=gDVzrbzp8juMdFIdnvDDjEgFYKfvm8bH","alt":"How do different types of investments in India"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2024-12-31T10:54:11","updated_on":"2024-12-31T10:54:24","read_more_title":"Know More","slug":"/different-types-of-investments-in-india","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/investments\" hreflang=\"en\">Investments\u003C/a>","description":"\u003Cp>Investing in the right financial products and plans is the wisest way to build wealth over time, outpace inflation, and achieve your financial goals. The biggest roadblock people face while beginning their investment journey is choosing the right investment options. Since the Indian financial market has grown significantly, it now provides different types of investments in India. This article covers the top investment options in India, so you have a good starting point for your investment journey. So, let’s explore the top and most common investment options shared below:\u003C/p>\u003Ch2>\u003Cstrong>Stocks\u003C/strong>\u003C/h2>\u003Cp>Also known as equities, stocks are certificates of ownership in a company. After carefully evaluating the company profile, market conditions, and other economic factors, you can purchase stocks from stock exchanges, like the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), etc. Buying a share is similar to purchasing a portion of the company, making you eligible to benefit from its growth and profits. \u003C/p>\u003Cp>Investors can benefit from stock investments by selling the shares at a higher price when share prices rise and receiving dividends from the company’s profits. Stocks are among the riskiest types of investments in India because of market volatility, but they also have higher return potential. \u003C/p>\u003Ch2>\u003Cstrong>Bonds\u003C/strong>\u003C/h2>\u003Cp>Bonds are debt instruments issued to raise money from the market for a predetermined period. When you invest in bonds in India, you’re lending money to the bond issuer for a specific period. You get rewarded for this investment by receiving fixed or varying interests at predetermined intervals, depending on the bond type and issuer. You also receive the original investment (principal) amount back upon maturity. \u003C/p>\u003Cp>Bond investments are relatively safer than stocks because they provide a more predictable return as interest. If you’re looking for investment with good returns, search for bonds issued by governments, reliable corporations, or entities with good credit ratings. Alternatively, you can invest in safer bonds via debt mutual funds.\u003C/p>\u003Ch2>\u003Cstrong>Real Estate\u003C/strong>\u003C/h2>\u003Cp>Real estate is among the most common types of investment people make to generate profit. If you have enough capital, you can purchase properties and give them on rent for a fixed monthly rental income. People who don’t like the hassle of finding tenants and managing properties can invest in Real Estate Investment Trusts (REITs).\u003C/p>\u003Cp>If you’re new to REITs, then refer to companies that own and operate income-generating properties. Investing in REITs makes you eligible to receive a percentage of profits. You can explore other avenues to earn profits from real estate that align with your financial goals, risk profile, and lifestyle.\u003C/p>\u003Ch2>\u003Cstrong>Fixed Deposits\u003C/strong>\u003C/h2>\u003Cp>Conservative investors looking for the safest types of investment decisions may consider investing in fixed deposits. It is a secure agreement wherein you agree to deposit a fixed amount of money for a specific tenure in exchange for fixed interest income. All banks and similar financial institutions provide fixed deposits. The most notable benefits of investing in fixed deposits are their safety and stability. You will still receive the fixed interest income even if market conditions become volatile.\u003C/p>\u003Ch2>\u003Cstrong>Mutual Funds\u003C/strong>\u003C/h2>\u003Cp>Mutual funds are a basket of investments comprising diversified portfolio assets like stocks, bonds, and other financial securities. When you invest in these funds, you essentially gain ownership of a portion of the fund’s assets. All returns from mutual funds are based on the fund’s performance.\u003C/p>\u003Cp>Since professional fund managers manage them, you don’t have to independently research different stocks and securities before investing. Mutual funds provide diversification, liquidity, and ease of investment through a Systematic Investment Plan (SIP), making them a desirable investment option for most busy individuals.\u003C/p>\u003Ch2>\u003Cstrong>Public Provident Fund (PPF)\u003C/strong>\u003C/h2>\u003Cp>It is one of the safest types of investments in India because the Indian government regulates it. Public Provident Fund (PPF) is a long-term investment option designed to support people’s retirement years. Investors can invest in PPF during their working years for a specific duration. In exchange, they receive a fixed income during their retirement years. PPF plans generally have a long lock-in period and provide tax deduction benefits u/s 80 C. If you want to diversify your investment options, you can explore our \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">retirement plans\u003C/a> and savings plans.\u003C/p>\u003Ch2>\u003Cstrong>National Pension System (NPS)\u003C/strong>\u003C/h2>\u003Cp>Anyone wanting to create a secure income stream for retirement years must consider the National Pension System (NPS). It is among the safest types of investment you can have in your portfolio. Any Indian citizen aged 18 to 65 can invest in NPS. When you contribute to NPS, professional fund managers invest the amount in equity, bonds, and a mix of securities per your chosen investment plan. This investment grows over time, and the accumulated amount is used to give you a pension after retirement.\u003C/p>\u003Ch2>\u003Cstrong>Unit-Linked Insurance Plans (ULIP)\u003C/strong>\u003C/h2>\u003Cp>Unit-Linked Insurance Plans (ULIP) are among the \u003Ca href=\"https://www.shriramlife.com/life-insurance/investment-plan\" target=\"_blank\">best investment plans\u003C/a> in India because they provide dual benefits of investment and insurance. When you invest in ULIPs, a portion of your investment is used to provide insurance coverage and the remaining is invested in market-linked securities. These plans are ideal for people with moderate to high-risk appetites.\u003C/p>\u003Cp>\u003Ca href=\"https://www.shriramlife.com/life-insurance/golden-jubilee-plan\" target=\"_blank\">Shriram Golden Jubilee Plan\u003C/a> is a unit-linked non-participating plan that provides dual benefits of investment and protection. The top benefits of investing in this plan include flexibility, partial withdrawals, tax benefits, etc. You can also explore \u003Ca href=\"https://www.shriramlife.com/life-insurance/wealth-pro\" target=\"_blank\">Shriram Life Wealth Pro\u003C/a>, a unit-linked plan designed to grow wealth and protect your family’s financial future. It provides customized life coverage, greater liquidity, multiple fund options, and more.\u003C/p>\u003Ch2>\u003Cstrong>Senior Citizens Savings Scheme (SCSS)\u003C/strong>\u003C/h2>\u003Cp>SCSS is a government-backed savings scheme designed to provide steady income to retirees and senior citizens. Residents over 60 can invest in SCSS for a block of 5 years and extend it another 3 years later. Senior citizens receive interest income on their contributions, and the government reviews it quarterly. While this plan provides numerous benefits, like a nomination facility, relatively high interest rate, predictable income, etc., premature closing can attract penalties. \u003C/p>\u003Ch2>\u003Cstrong>Savings/Endowment Plans\u003C/strong>\u003C/h2>\u003Cp>Savings and endowment plans are life insurance plans that provide the dual benefits of savings and insurance. Out of all the different types of investments in India, these are suitable for people who want to secure their family’s financial future while saving money to achieve specific financial goals. \u003Ca href=\"https://www.shriramlife.com/life-insurance/fortune-builder\" target=\"_blank\">Shriram Life Fortune Builder plan\u003C/a> is an ideal example. It provides long-term life insurance coverage while giving savings benefits.\u003C/p>\u003Cp>It comes with additional protection through riders, unlimited fund switches, flexible settlement options, and more. People focused on building wealth while protecting their family’s financial future must explore our \u003Ca href=\"https://www.shriramlife.com/life-insurance/growth-plus\" target=\"_blank\">Life Growth Plus plan\u003C/a>. It provides life cover and savings benefits through market-linked earnings.\u003C/p>\u003Ch2>\u003Cstrong>Retirement Annuity Plans\u003C/strong>\u003C/h2>\u003Cp>Retirement annuity plans are designed to provide a steady, predictable income during your golden years. You invest in these plans in multiple premium payments or a one-time lump sum amount. In return, the insurer provides a fixed income post-retirement for a predetermined period. It is a good retirement investment plan for senior citizens who want financial stability in their non-working years. You can further strengthen your retirement planning by diversifying your investment pool. Explore our \u003Ca href=\"https://www.shriramlife.com/life-insurance/protection-plan\" target=\"_blank\">protection plans\u003C/a> to find a policy that complements your other investments.\u003C/p>\u003Ch2>\u003Cstrong>Gold\u003C/strong>\u003C/h2>\u003Cp>Out of all the types of investment decisions you make, including gold in your investment portfolio can be the most rewarding. Gold has been used as a hedge against inflation for decades and is often seen as a safe investment asset that doesn’t slump during economic uncertainties. It is also perfect for diversifying your portfolio as it generally moves in the opposite direction of the stock market. Hence, gold prices will rise when stock prices go down, balancing the risk factor in your portfolio. Depending on your investment preferences, you can invest in physical gold, sovereign gold bonds (SGBs), gold mutual funds, or gold exchange-traded funds (ETFs).\u003C/p>\u003Ch2>\u003Cstrong>Risk Level of Investment Options\u003C/strong>\u003C/h2>\u003Cp>All types of investments in India carry a certain level of risk. Common investment options typically have the following risk profiles:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan>\u003Cstrong>Investment\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>\u003Cstrong>Risk Profile\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Stocks\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Bonds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low to moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Real Estate\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Fixed Deposits\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Mutual Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Public Provident Funds (PPF)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>National Pension System (NPS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Unit-Linked Insurance Plan (ULIP)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Senior Citizens Savings Scheme (SCSS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Retirement Annuity Schemes\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Gold\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low to moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Benefits of Investments \u003C/strong>\u003C/h2>\u003Cp>Everyone should start investing early to enjoy its multiple benefits. The top benefits of investing include:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Wealth Creation:\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing in the right options will help you build and grow your wealth. Whether you invest in stocks, mutual funds, real estate, etc., you can expect to build significant wealth through the power of compounding and capital appreciation.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Financial Security\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing in the right securities and plans will safeguard you and your family’s financial future, bringing ease and peace of mind. It will act as a financial cushion during times of emergency. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Beating Inflation\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Market-linked investments have the potential to generate higher returns that can outweigh inflation. It will help you preserve your money’s purchasing power. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Tax Benefits\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Many investment options provide tax benefits on contribution amount and maturity proceeds. Since not every investment has the same tax benefits, always check tax implications specific to your investments. \u003C/p>\u003Ch2>\u003Cstrong>How to Invest?\u003C/strong>\u003C/h2>\u003Cp>The different types of investments in India can easily overwhelm anyone. You can use the following tips to invest in the right financial products or plans:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Set Clear Financial Goals\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Always start by defining your financial goals, as this can help you narrow down potential investment options. For example, retirees wanting a steady income may choose a retirement annuity plan, whereas young individuals wanting to build wealth can explore equity investing.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Understand Your Risk Tolerance\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>All investment options carry a certain degree of risk, so investing is recommended based on your risk tolerance. Fixed deposits, NPS, and PPF, are ideal for people with low-risk profiles, whereas stocks, mutual funds, ULIPs, etc., are recommended for people with moderate to high-risk appetite.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Research Carefully\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>The Indian financial market is vast, so always research about the investments you plan to include in your portfolio. Align it with your risk tolerance to make safer choices. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Diversify Your Portfolio\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Never build your portfolio around a single asset class. A diversified portfolio featuring stocks, annuity plans, fixed deposits, balanced mutual funds, bonds, gold, etc., is a better option because it minimizes risk and balances returns.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Start Early and be Consistent\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing early will give you the benefit of compounding, and being consistent will ensure you continue building wealth while securing your family’s future. \u003C/p>\u003Ch2>\u003Cstrong>Things to Cover While Investing\u003C/strong>\u003C/h2>\u003Cp>To enjoy optimal benefits from investing in India, ensure you remain vigilant in the following areas:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Fraudulent Activities/Platforms\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Be wary of any investment plan or platform that promises unrealistic or guaranteed risk-free, high returns. Avoid investing through unregistered platforms by verifying every platform’s registration details on SEBI’s website. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Factor in Investment Risks\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investments are influenced by various factors, making them risky. Hence, always factor in market fluctuations and focus on building a diversified portfolio that balances risk profile and optimises returns. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Safeguard Your Interests\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>As an investor, you must take proactive steps to secure yourself and your investments. For example, never invest without doing due research or being aware of hidden fees charged by platforms or brokers. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Investing is a must for every individual who wants to achieve financial stability, security, and goals over a period. If you are hesitant to start your investing journey because of the wide range of investment options, consider using this article as the starting point for exploring the top options. You can also check the different retirement, \u003Ca href=\"https://www.shriramlife.com/life-insurance/savings-plan\" target=\"_blank\">savings\u003C/a>, protection, and \u003Ca href=\"https://www.shriramlife.com/life-insurance/child-plan\" target=\"_blank\">child plans\u003C/a> at Shriram Life Insurance to build a stable financial future. Each plan is diverse and comes with unique features, so explore the relevant plans and invest accordingly.\u003C/p>","category":"/blog/advice"},{"title":"What should I consider when choosing long-term investment options in India","heading":"What Should I Consider When Choosing Long-Term Investment Options in India?","short_description":"\u003Cp>Long-term investment planning is important for anyone who wants to financially secure their future and achieve financial stability.\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2024-12/41.%20What%20should%20I%20consider%20when%20choosing%20long-term%20investment%20options%20in%20India_0.png?VersionId=8pGAAzuTzmvFxymBNLjReLXimW49o15x","alt":"Benefits of choosing long term investment options in India"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2024-12-30T10:50:50","updated_on":"2024-12-30T10:50:55","read_more_title":"Know More","slug":"/what-should-i-consider-when-choosing-long-term-investment-options-in-india","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>, \u003Ca href=\"/blog/guides/investments\" hreflang=\"en\">Investments\u003C/a>","description":"\u003Cp>Long-term investment planning is important for anyone who wants to financially secure their future and achieve financial stability. These investments deliver returns using the benefit of compounding, where your investments grow over a period. They also help ensure your money grows and retains its purchasing power against the effect of inflation and rising prices and cost of living. Unlike short-term investments, long-term investment options provide greater stability by lowering the impact of market volatility, especially when you stay invested through market cycles.\u003C/p>\u003Cp>While everyone knows the importance of buying long-term investments, many find the wide range of options overwhelming, making it seem challenging to select the right investments. It often prevents them from starting their investment journey at the appropriate time. This blog covers factors to consider while choosing long-term investments so you can identify the right investment options with higher return potential.\u003C/p>\u003Cp>Let us explore the following factors to be considered:\u003C/p>\u003Ch2>\u003Cstrong>Financial Goals\u003C/strong>\u003C/h2>\u003Cp>Defining your financial goals is the foundation for choosing the right long-term investment plan. Decide whether you want to invest for wealth accumulation or save towards children’s higher education expenses. Setting a clear goal and investment objective will help you narrow down choices that perfectly align with your long-term financial goals.\u003C/p>\u003Cp>For example, if your ultimate goal is earning risk-free retirement income, you may choose to invest in National Pension Scheme (NPS) or Public Provident Fund (PPF) over making equity investments. \u003Cbr />People who want to build wealth through market-linked earnings over a period and create a financial cushion for their family can consider investing in our \u003Ca href=\"https://www.shriramlife.com/life-insurance/golden-jubilee-plan\" target=\"_blank\">Shriram Life Golden Jubilee Plan\u003C/a>. It provides protection and investment benefits in a single plan with various other features like tax benefits, partial withdrawal, easy fund switching, etc\u003C/p>\u003Ch2>\u003Cstrong>Cost of Investment\u003C/strong>\u003C/h2>\u003Cp>It is one of the essential points to consider while choosing long term investments, yet the most overlooked. Investment costs generally include account opening charges, annual maintenance fees, brokerage charges, fund management expenses, etc. High investment costs can erode returns over time if you’re investing in long-term options.\u003C/p>\u003Cp>For example, some mutual funds may have a higher expense ratio than others, resulting in lower returns for investors. So, always calculate your cost of investment and compare similar investment options. This will help you easily identify the best investment options in India for the long term where return on investment (ROI) is attractive.\u003C/p>\u003Ch2>\u003Cstrong>Return on Investment (ROI)\u003C/strong>\u003C/h2>\u003Cp>Everyone prefers investing in high ROI options because they measure the profitability of an investment. Since you’re making long-term investments, focus on earning consistent, inflation-beating returns rather than short-term gains.\u003C/p>\u003Cp>Always compare historical performance if you’re investing in stocks, fixed deposits, mutual funds, or any other long-term investment options. If your primary investment focus is good returns, then high-ROI options like equities may be considered. Traditional plans like PPF provide slightly lower returns but are typically more stable than equities.\u003C/p>\u003Ch2>\u003Cstrong>Liquidity\u003C/strong>\u003C/h2>\u003Cp>Since many people choose long-term investment options for growth, liquidity doesn’t matter to them. However, buying investments with some flexibility is encouraged to counter unexpected financial challenges. For example, if you have PPF investments, you can use its partial withdrawal facility to cover unexpected medical expenses.\u003C/p>\u003Cp>The same may not be possible with Fixed Deposits (FDs) because they may charge penalties for early withdrawal, lowering your funds. Hence, always evaluate the liquidity provisions to pick suitable options.\u003C/p>\u003Ch2>\u003Cstrong>Tax Implication\u003C/strong>\u003C/h2>\u003Cp>The correct investment options typically provide various tax benefits. It can help you reduce your taxes while increasing your earnings. For example, when you invest in options like ELSS mutual funds, PPF, and NPS, you can claim deductions for the contribution amount u/s 80 C while filing the income tax return.\u003Cbr />Certain investment options like ULIPs provide tax-free returns u/s Sec 10(10D) if your premium payments are less than 10% of the policy’s sum assured value. Pick your investments strategically to lower your tax liability and maximize tax-free returns.\u003C/p>\u003Ch2>\u003Cstrong>Risk Tolerance\u003C/strong>\u003C/h2>\u003Cp>You should always invest in options whose risk level aligns with your risk tolerance. Conservative investors who want risk-free returns should explore low-risk options like fixed deposits, annuity plans, or any guaranteed return plans. You can also check our \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">retirement plans\u003C/a> and \u003Ca href=\"https://www.shriramlife.com/life-insurance/savings-plan\" target=\"_blank\">savings plans\u003C/a> to find low-risk options.\u003Cbr />If you have a moderate to high-risk appetite, you can explore high-risk options like ULIPs, EFTs, equity mutual funds, etc. Our \u003Ca href=\"https://www.shriramlife.com/life-insurance/fortune-builder\" target=\"_blank\">Shriram Life Fortune Builder Plan\u003C/a> is ideal for people with moderate to high-risk profiles. It is a single-premium life insurance plan that provides protection and savings benefits in a single plan. \u003C/p>\u003Cp>Individuals with moderate risk profiles should create a diversified investment portfolio comprising low, medium, and high-risk investments to balance steady growth and high earning potential. All goal-based investments must be made after assessing your risk tolerance. \u003C/p>\u003Ch2>\u003Cstrong>Investment Terms\u003C/strong>\u003C/h2>\u003Cp>It is one of the most crucial factors to consider while choosing long-term investments because it dictates the lock-in periods, exit options, penalties for early withdrawals, cost of investment, and all other investment-related conditions. Not all investment products are designed the same, so always look for options that align with your financial goals, lifestyle, and obligations.\u003C/p>\u003Cp>For example, you may invest in Equity Linked Savings Scheme (ELSS) funds over Public Provident Fund (PPF) because the former has a shorter lock-in period than PPF. It can be beneficial for individuals with kids to meet unexpected education expenses in the short term. Understanding investment terms will help you finalize options that align with your liquidity needs without unwanted constraints.\u003C/p>\u003Ch2>\u003Cstrong>Regulatory and Market Factors\u003C/strong>\u003C/h2>\u003Cp>All investments are governed by specific regulations and market conditions. For example, schemes like National Pension Scheme (NPS) and Public Provident Fund (PPF) are government-backed and strictly regulated, due to which they’re considered relatively secure long-term investment options. \u003C/p>\u003Cp>On the other hand, market-linked investment options such as stocks are affected by economic trends, making them risky for conservative investors. If you want to buy the most rewarding and best investment options in India for the long term, evaluate the governing and regulatory factors before committing. A regulated, transparent plan will minimize risk and ensure accountability, so choose wisely. \u003C/p>\u003Ch2>\u003Cstrong>Types of Investment Options\u003C/strong>\u003C/h2>\u003Cp>Since everyone invests to either grow their income, create safe income streams post-retirement, or build wealth over a period, most investment plans can be categorized into the following three options:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">\u003Cstrong>Growth\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">\u003Cstrong>Safe\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">\u003Cstrong>Income\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">These are generally long-term investment options with a longer lock-in period. They are volatile and don’t allow premature withdrawals.\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">As the name suggests, these options keep the investment safe and help you achieve mid-term financial goals. They generally don’t allow withdrawals in the first few years of investment.\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">It is the best low-risk investment option to convert a lump sum payment into monthly/quarterly/annual income. \u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cp>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">ULIPs\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Sovereign Gold Bonds (SGBs)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Infrastructure bonds\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Mutual funds\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Equity stocks\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">PPF\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">NPS\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Equity-linked Saving Scheme(ELSS)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Real Estate Investment Trusts (REITs)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Exchange Traded Funds (EFTs)\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003Ctd>\u003Cp>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Fixed deposits\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Guaranteed savings plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Recurring deposits\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Treasury bills\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Corporate fixed deposits (from top-rated companies)\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003Ctd>\u003Cp>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Pension plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Immediate annuity plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Post Office Senior Citizens Welfare Fund \u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Dividend-paying stocks\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Non-convertible debenture\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Debt mutual funds\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Risk Level of Top Investment Options in India\u003C/strong>\u003C/h2>\u003Cp>The following information can be beneficial if you want to choose the best investment options in India for long term based on your risk profile:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">\u003Cstrong>Level of Risk Involved\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">\u003Cstrong>Investment Option\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">\u003Cstrong>Description of the Investment Option\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">ULIPs\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Combines investment in market-linked funds with life insurance coverage\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Bank fixed deposits\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Investments are locked for a fixed tenure, providing assured returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Pension plans\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Long-term investment plans designed to provide regular income post-retirement.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Equity Mutual Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Funds invested primarily in stocks for higher growth potential.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Hedge Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Actively managed fund that uses pooled investment to maximize returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Corporate bonds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Debt securities issued by companies to raise capital, providing fixed interest payment.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Annuity plans\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Financial product providing regular pay-outs, typically after retirement.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Index funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Mutual funds that replicate the performance of a specific stock market index.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Balanced mutual funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Funds investing in both equities and debt instruments for balanced risk and returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Senior Citizen Savings Scheme (SCSS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">A government-backed scheme providing assured returns to senior citizens.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Post Office Monthly Income Scheme (POMIS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Investment plan providing fixed monthly income through post offices.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Initial Public Offering (IPO)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Process of raising capital by companies for the first time in exchange of shares. \u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Debt mutual funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\"EN-IN\" lang=\"EN-IN\">Funds that invest primarily in fixed-income securities, like bonds and treasury bills.\u003C/span>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Making strategic long-term investments is a great way to systematically build wealth over a period. Whether you want to create a large retirement fund, build your dream house after a few years, make provisions for your children’s higher educational costs or marriage, etc., you can achieve all your goals by choosing the best investment options in India for the long term.\u003C/p>\u003Cp>You can use the factors discussed in this article to choose the right investment options that align with your financial goals. For instance, check our \u003Ca href=\"https://www.shriramlife.com/life-insurance/growth-plus\" target=\"_blank\">Shriram Life Growth Plus Plan\u003C/a> if you want life cover and savings benefit in a single policy. Those looking to build wealth over time and secure their family’s financial future can consider our \u003Ca href=\"https://www.shriramlife.com/life-insurance/wealth-pro\" target=\"_blank\">Shriram Life Wealth Pro Plan\u003C/a>. You can also explore the various \u003Ca href=\"https://www.shriramlife.com/life-insurance/child-plan\" target=\"_blank\">Child Plans\u003C/a> and \u003Ca href=\"https://www.shriramlife.com/life-insurance/protection-plan\" target=\"_blank\">Protection Plans\u003C/a> at Shriram Life Insurance to diversify your long-term investment portfolio for maximum benefits.\u003C/p>","category":"/blog/advice"},{"title":"Why Millennials love Super Income Plan","heading":"Why Millennials love Super Income Plan","short_description":"\u003Cp>In an era marked by economic uncertainty and evolving financial landscapes, millennials are increasingly prioritizing financial stability and plann\u003C/p>","tile_image":[{"media_img":{"url":"https://cdn.shriramlife.com/slic-kalam/files/2024-12/10.%20Why%20Millennials%20love%20Super%20Income%20Plan_0.png?VersionId=D_0cCoUxuCHeach1Ds_9hd6cJL9Xqdz2","alt":"Why Millennials love Super Income plan?"},"media_svg":null,"media_svg_alt":"","media_document":null}],"posted_on":"2024-12-26T17:31:40","updated_on":"2024-12-26T17:32:03","read_more_title":"Know More","slug":"/why-millennials-love-super-income-plan","field_bl_tag":"\u003Ca href=\"/blog/guides/recent\" hreflang=\"en\">Recent\u003C/a>, \u003Ca href=\"/blog/guides/advice\" hreflang=\"en\">Advice\u003C/a>, \u003Ca href=\"/blog/guides/retirement\" hreflang=\"en\">Retirement\u003C/a>, \u003Ca href=\"/blog/guides/savings\" hreflang=\"en\">Savings\u003C/a>, \u003Ca href=\"/blog/guides/life-insurance\" hreflang=\"en\">Life Insurance\u003C/a>","description":"\u003Cp>In an era marked by economic uncertainty and evolving financial landscapes, millennials are increasingly prioritizing financial stability and planning for the future. Among the array of financial products available, Super Income Plans have emerged as a compelling option for this generation of savers who are seeking to secure their savings and plan for retirement effectively. This blog explores why millennials are gravitating towards Super Income Plans, highlighting their benefits and relevance in today's financial climate.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Shriram Life Super Income Plan: A Secure Path to Savings and Retirement\u003C/strong>\u003C/h2>\u003Cp>Super Income Plans such as the Shriram Life Super Income Plan are structured \u003Ca href=\"https://www.shriramlife.com/life-insurance/retirement-plan\" target=\"_blank\">retirement savings insurance plans\u003C/a> designed to provide policyholders with a guaranteed income stream during their retirement years. Unlike traditional savings accounts or investments, which may be subject to market fluctuations, these plans offer stability and predictability in income, making them particularly attractive to millennials who value financial security.\u003C/p>\u003Ch2>\u003Cstrong>Why Millennials Choose Super Income Plans\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>1. Guarantee of Income in Retirement\u003C/strong>\u003C/h3>\u003Cp>Millennials, known for their cautious approach to financial planning, appreciate the certainty offered by Super Income Plans. These plans ensure a regular income stream, either for a fixed term or throughout their lifetime, thereby mitigating the risk of outliving savings. This feature aligns well with millennials' desire for stability amidst economic uncertainties, providing peace of mind that their retirement income is secured regardless of market conditions.\u003C/p>\u003Ch3>\u003Cstrong>2. Long-Term Financial Planning Made Simple\u003C/strong>\u003C/h3>\u003Cp>Planning for retirement can seem daunting, especially for millennials facing competing financial priorities such as student loans, housing costs, and career advancement. Super Income Plans simplify long-term financial planning by offering a structured approach to savings. Millennials can contribute regularly to these plans during their working years, knowing that they are building a reliable source of income for their retirement. This disciplined saving habit resonates with millennials' preference for financial strategies that are straightforward and goal-oriented.\u003C/p>\u003Ch3>\u003Cstrong>3. Customization Options to Fit Individual Needs\u003C/strong>\u003C/h3>\u003Cp>Flexibility is a key selling point of Super Income Plans that appeals to millennials. These plans allow policyholders to customize various parameters, such as the payout frequency and duration, based on their specific financial goals and lifestyle preferences. For millennials balancing diverse financial goals, such as travel aspirations and family planning, the ability to tailor their Super Income Plan ensures that their retirement strategy remains adaptable and aligned with evolving life stages.\u003C/p>\u003Ch3>\u003Cstrong>4. Integration of Insurance Benefits\u003C/strong>\u003C/h3>\u003Cp>Super Income Plans such as the Shriram Life Super Income Plan include savings insurance plans benefits that provide additional layers of financial protection. These may include provisions for disability coverage or death benefits, ensuring that policyholders and their loved ones are safeguarded against unexpected life events. Millennials, recognizing the importance of comprehensive financial planning, value the peace of mind that comes from knowing their Super Income Plan not only secures their retirement but also protects their financial well-being throughout their lives.\u003C/p>\u003Ch3>\u003Cstrong>5. Legacy Planning and Future Security\u003C/strong>\u003C/h3>\u003Cp>While millennials are focused on their own financial futures, they also prioritize leaving a legacy for their loved ones. Super Income Plans support legacy planning by allowing policyholders to designate beneficiaries who will receive the remaining payouts or accumulated funds upon their demise. This aspect of the plan ensures that millennials can pass on financial security to future generations, reinforcing their commitment to long-term financial responsibility and family welfare.\u003C/p>\u003Ch3>\u003Cstrong>6. Diversification of Retirement Assets\u003C/strong>\u003C/h3>\u003Cp>Millennials understand the importance of diversifying their investment portfolio to mitigate risk. Super Income Plans offer a diversified approach to retirement savings by providing a stable income stream alongside traditional investments like stocks and bonds. This diversification strategy appeals to millennials seeking to balance risk and reward while building a resilient retirement fund.\u003C/p>\u003Ch3>\u003Cstrong>7. Inflation Protection\u003C/strong>\u003C/h3>\u003Cp>Many Super Income Plans include provisions for inflation protection, ensuring that the purchasing power of retirement income remains intact over time. Millennials, who are keenly aware of the impact of inflation on their finances, appreciate this feature as it helps maintain the value of their income amidst rising living costs.\u003C/p>\u003Ch3>\u003Cstrong>8. Tax Efficiency\u003C/strong>\u003C/h3>\u003Cp>Super Income Plans often provide tax advantages, such as tax-deferred growth on contributions and potential tax-exempt payouts under certain conditions. Millennials, who are proactive about optimizing their tax liabilities, recognize the benefits of these tax-efficient savings vehicles in enhancing overall retirement readiness.\u003C/p>\u003Cp>By addressing these additional points, millennials can gain a comprehensive understanding of how Super Income Plans such as the Shriram Life Super Income Plan align with their financial goals and aspirations for a secure retirement.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion: \u003C/strong>\u003C/h2>\u003Ch2>\u003Cstrong>Super Income Plans for Millennial Financial Confidence\u003C/strong>\u003C/h2>\u003Cp>In conclusion, Super Income Plans represent more than just a retirement savings tool for millennials- they embody a strategic approach to financial security and future planning. By offering guaranteed income, customization options, and integrated \u003Ca href=\"https://www.shriramlife.com/life-insurance/savings-plan\" target=\"_blank\">savings insurance plans\u003C/a> benefits, these plans empower millennials to build a robust financial foundation while preparing for retirement with confidence.\u003C/p>\u003Cp>Whether you're a millennial navigating the complexities of financial planning or an individual looking to secure your retirement, exploring the benefits of Super Income Plans can provide clarity and assurance in achieving your financial goals. Embrace the certainty and flexibility of Super Income Plans today to pave the way for a financially secure tomorrow.\u003C/p>\u003Cp>Understanding the nuances of Super Income Plans and how they align with millennials' financial aspirations underscores their relevance in today's dynamic economic landscape. By harnessing the benefits of these plans, millennials can forge a path towards financial independence and retirement readiness, ensuring a future filled with stability, security, and prosperity.\u003Cbr /> \u003C/p>","category":"/blog/super-income-plan"}],"blog_count":[{"count":133,"counts":133}],"nothing":"all","nothing_1":317}],"headers":{"x-powered-by":["Express"],"x-frame-options":["SAMEORIGIN"],"content-type":["text/html; charset=utf-8"],"content-length":["148284"],"etag":["W/\"2433c-Z1sf7s7yMcpUgHhGVpPFjM7hR6s\""],"vary":["Accept-Encoding"],"date":["Tue, 21 Jan 2025 07:27:19 GMT"],"connection":["keep-alive"],"keep-alive":["timeout=5"]},"status":200,"statusText":"OK","url":"http://127.0.0.1:4000/api/v1/tagged-blogs/317/all","responseType":"json"},"2489646597":{"body":[{"title":"Api - Header","top_nav":[{"title":"Header - Top nav Test","menu_group":[{"title":"Initiate Claim","heading":"Initiate Claim","menu_link":{"url":"https://myaccount.shriramlife.com/CustomerPortal/ClaimIntimation","text":"Initiate Claim"},"sub_menu":[],"classes":"link","menu_style":"Normal"},{"title":"New Policy Payment","heading":"New Policy Payment","menu_link":{"url":"https://shriramlife.in/SLP/PaymentProcess","text":"https://shriramlife.in/SLP/PaymentProcess"},"sub_menu":[],"classes":"link","menu_style":"Normal"},{"title":"Top Nav - Become an agent","heading":"Become an agent","menu_link":{"url":"/legal/become-an-advisor","text":"Became an Agent"},"sub_menu":[],"classes":"link","menu_style":"Normal"},{"title":"Top Nav - Quick Pay","heading":"Quick Pay","menu_link":{"url":"https://shriramlife.in/SLP/Digital/SLICInstaRenew.aspx","text":"Quick Pay"},"sub_menu":[],"classes":"btn","menu_style":"Normal"},{"title":"Resume Journey","heading":"Resume Journey","menu_link":{"url":"https://buy.shriramlife.com/OnlineInsurance/Resume-Application","text":"Resume 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Plan\"},{\"id\":1782,\"name\":\"Advice\"},{\"id\":1930,\"name\":\"Child Plan\"},{\"id\":1979,\"name\":\"Early Cash Plan\"},{\"id\":1982,\"name\":\"Assured Income Plan\"},{\"id\":1984,\"name\":\"Golden Premier Saver Plan\"},{\"id\":1985,\"name\":\"Premier Assured Benefit\"}],\"blogs\":[{\"title\":\"Key Differences of Policy Term and Premium Paying Term\",\"heading\":\"Key Differences of Policy Term and Premium Paying Term\",\"short_description\":\"\u003Cp>When it comes to financial planning, it is important to be prudent and well-informed.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/10.%20Clarifying%20Policy%20Term%20and%20Premium%20Paying%20Term_0.webp?VersionId=8PsDtHY8xGLnr1dtpAt4XNa.aB.pfMEf\",\"alt\":\"Policy Term vs Premium Paying Term\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-21T05:54:26\",\"updated_on\":\"2025-01-21T05:54:31\",\"read_more_title\":\"Know More\",\"slug\":\"/key-differences-of-policy-term-and-premium-paying-term\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>\",\"description\":\"\u003Cp>When it comes to financial planning, it is important to be prudent and well-informed. Understanding how a Life Insurance Policy works is a key part of this. When you know the options available and how each of those options works, you can make well-informed decisions to achieve a personalized financial protection plan.\u003C/p>\u003Cp>Two important concepts in the life insurance domain are - the policy term and premium paying term. Let us examine each in detail. Understanding what each of these means will aid in one’s understanding of how insurance policies work. \u003C/p>\u003Cp>Both the policy term and premium paying term, though reads similar, refer to two distinct components of a life insurance policy each carrying significant implications for both the policyholder and their beneficiaries.\u003C/p>\u003Cp>In this blog, we will explore these terms in-depth, examining their fundamental differences, key factors to consider when making decisions about them, and scenarios in which they are particularly applicable to various financial situations. This comprehensive analysis aims to equip you with the knowledge necessary to plan your life insurance plans effectively.\u003C/p>\u003Ch2>\u003Cstrong>What Is A Policy Term?\u003C/strong>\u003C/h2>\u003Cp>A policy term refers to the duration of the policy that is covered under the insurance policy. A insurance policy of 40 years will have a policy term extending to 40 years during which time, the insured’s family members will receive the compensation of the policy in case of an unfortunate event in the insured’s life.\u003C/p>\u003Ch2>\u003Cstrong>What is a Premium Paying Term (PPT)?\u003C/strong>\u003C/h2>\u003Cp>Premium paying term refers to the period in your insurance policy in which you pay premiums to maintain your insurance coverage. Example, if a insurance policy extends to 40 years of which, the insured is expected to pay premiums until 20 years, then the premium paying term for that particular policy will be 20 years.\u003C/p>\u003Ch3>\u003Cstrong>Differences Between Policy Term and Premium Paying Term\u003C/strong>\u003C/h3>\u003Cp>Understanding the difference between policy term and premium paying term can help you make informed decisions when choosing a Life Insurance Policy that aligns with your specific needs and financial goals. A few of the most important differences are put together below:\u003C/p>\u003Ch3>\u003Cstrong>Examples\u003C/strong>\u003C/h3>\u003Ch3>\u003Cstrong>Duration of Coverage:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term-\u003C/strong> If you choose a 20-year policy term, then your dependents will be covered for that period of 20 years. If the unfortunate demise of the policyholder or life insured occurs within such a period, then the will beneficiaries receive the agreed-upon death benefit.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term- \u003C/strong>However, if your premium paying term is 10 years, you will pay premiums for only 10 years, but your coverage will continue for the full 20 years. After the premium paying term is completed, the plan continues with the coverage and benefits and no further premiums need to be paid by the policyholder.\u003C/p>\u003Cp>In such an instance, risk coverage provided by the insurer is typically paid for from within the accumulated funds within the plan.\u003C/p>\u003Ch3>\u003Cstrong>Financial Implications:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term-\u003C/strong> A 30-year policy term ensures that your family will receive the death benefit for three decades. This extended coverage is particularly beneficial during critical life stages, such as raising children or paying off a mortgage, when financial obligations are at their peak.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term- \u003C/strong>The premium paying term specifies the period during which you are required to make premium payments. A shorter premium paying term, such as a 15-year premium paying term, can significantly ease your current financial burden. If you are considering accumulation of funds or savings alongside the insurance protection, some plans where your premium amount is deployed in market linked investments, paying more years would obviously enhance the amount of corpus at the end of the policy term.\u003C/p>\u003Ch3>\u003Cstrong>Flexibility:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term- \u003C/strong>If you choose a 20-year policy term, your dependents will be covered for the entire 20 years. Should you pass away within this period, your beneficiaries will receive the agreed-upon death benefit, providing them with financial security during a crucial time.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term-\u003C/strong> However, if your premium paying term is 10 years, you will pay premiums for only 10 years, while your coverage continues for the full 20 years. After the premium paying term ends, you won’t need to make any further payments, yet your beneficiaries will remain protected until the policy term expires, ensuring peace of mind without ongoing financial commitments.\u003C/p>\u003Cp>The other significant difference is the flexibility offered in each term. While many policies provide flexible premium paying terms, once a policy term is selected, it is usually fixed.\u003C/p>\u003Ch2>\u003Cstrong>Factors to Consider in Selecting Policy Term and Premium Paying Term\u003C/strong>\u003C/h2>\u003Cp>It is based on several considerations compatible with your current financial situation as well as future objectives. Among them, the following are a few important ones:\u003C/p>\u003Ch3>\u003Cstrong>Policy Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>\u003Cstrong>Financial Goals:\u003C/strong> What are you looking to achieve with your life insurance? Are you looking to provide financial assistance for your family in the event of an untimely death, or do you want to accumulate cash value for future use?\u003C/li>\u003Cli>\u003Cstrong>Age:\u003C/strong> In this again, age is a very important determinant of the term by which one should have a policy. Younger policyholders will benefit from long periods that cost them less, whereas older persons are most likely to opt for shorter terms based on their remaining life and obligations against them. This is not mandatory guideline but indicates usual patterns across different age groups of policy holders.\u003C/li>\u003Cli>\u003Cstrong>Family Needs:\u003C/strong> If you have dependents, you must choose a policy term that will be able to provide enough cover until they are independent and financially sound. A longer term will assure you peace of mind in these important years.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>Premium Paying Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>\u003Cstrong>Affordability:\u003C/strong> It is very important to choose a premium paying term that would fall within your capacity to pay.\u003C/li>\u003Cli>\u003Cstrong>Investment Strategy: \u003C/strong>If the purpose of purchasing a life insurance policy is for investment, then one should consider how the premium paying term fits into your overall investment strategy. Longer premium paying terms may allow growth in some types of policies.\u003C/li>\u003Cli>\u003Cstrong>Flexibility:\u003C/strong> Check if policies have flexible terms for premium payments. This flexibility may prove to be priceless when you think you might undergo a change in your financial circumstance that will affect your ability to pay premiums.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>Common Scenarios\u003C/strong>\u003C/h3>\u003Ch4>Scenario 1: Young Policyholder with Limited Pay Plan\u003C/h4>\u003Cp>Let's take the case of Radha, an individual who is in her early thirties. She chooses a 20-year policy term for her life insurance policy which means her coverage will extend until her early fifties. She further opts to pay her premiums for a 10-year premium paying term. That is precisely what she needs:\u003C/p>\u003Cp>\u003Cstrong>Duration of Insurance Coverage:\u003C/strong> Radha wants to ensure that her family, namely her children will get a financial benefit in case of her demise. This protection for 20 years is because by that time, they will likely be independent adults themselves and until that time, they will have the 20 years of protection through death benefit.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term: \u003C/strong>For 10 years, she pays premiums during her known productive working years and will cease to do so around the time her expenses for her children’s education or life goals may be higher. are inexpensive at this stage in crucial child-rearing years. It means that after this 10 year period, she will no longer pay the premium anymore, but her life is covered under life insurance until age 50 and her dependents will receive the death benefit payout until that time, in case of her death.\u003C/p>\u003Cp>As you can see from the above example, the planning for the policy period and the premium payment term must be based on a proper understanding of one’s needs and in alignment with one’s life journey.\u003C/p>\u003Ch4>Scenario 2: Older Age Client with Long-Term Needs\u003C/h4>\u003Cp>Here’s another scenario of Murali, now at the age of 40, with a more permanent source of income and seeking insurance coverage that will provide him with more than enough when he is at an old age. Here the goals are dual - one part is financial protection from the risk of death during one’s productive years. The second part is to accumulate savings to support one’s living beyond the retirement age by using the savings aspect of a suitable life insurance plan. Murali therefore chooses a 30-year policy term coupled with a 30-year premium paying term. This is how it works for him:\u003C/p>\u003Cp>\u003Cstrong>Duration of Insurance Coverage:\u003C/strong> Murali wants long-term coverage for his family, especially as retirement age is approaching and the children are still financially dependent and his spouse depends on his income.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term: \u003C/strong>Murali is committing to predictable premium payments extending over a 30 year span. It fits in well with his monthly budget and financial planning. Once this phase is over, he will have accumulated a good amount while having enjoyed the coverage. This way when he reaches retirement age and his income may drop he will have some funds to rely on.\u003C/p>\u003Cp>In this way, Murali is able to plan for his family’s finances in the event of his death during his working years and also parallelly save towards his retirement years.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Understanding the distinction between the policy term and the premium paying term equips you with the knowledge necessary to make informed choices. Additionally, this understanding allows you to recognize the flexibility some plans provide, enabling you to tailor them to your specific needs. We hope this insight helps simplify your decision-making process concerning coverage, financial commitments, and your overall financial strategy.\u003C/p>\u003Cp>\u003Ca href=\\\"https://www.shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a> provides wide range plans, including \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">Retirement Plans\u003C/a>, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">Savings Plans\u003C/a>, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">Child Plans\u003C/a>, and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">Protection Plans\u003C/a>, designed to meet your financial needs.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"The Impact of Lifestyle Choices on Life Insurance Premiums\",\"heading\":\"The Impact of Lifestyle Choices on Life Insurance Premiums\",\"short_description\":\"\u003Cp>Investing in life Insurance policies is one of the best decisions you can make to secure your family’s financial future.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/3.%20The%20Impact%20of%20Lifestyle%20Choices%20on%20Life%20Insurance%20Premiums%20copy_2.webp?VersionId=xR3yulN0Rjs867cuG5tZkrdUG2t7aUcy\",\"alt\":\"Lifestyle choices Impact on life insurance Premiums\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-20T05:36:04\",\"updated_on\":\"2025-01-20T05:36:08\",\"read_more_title\":\"Know More\",\"slug\":\"/impact-of-lifestyle-choices-on-life-insurance-premiums\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>\",\"description\":\"\u003Cp>Investing in life Insurance policies is one of the best decisions you can make to secure your family’s financial future. It will create a financial safety net for your loved ones in exchange for predetermined premium payments. While all life insurance plans are designed for the same purpose, different policyholders pay different premiums to receive similar benefits or even the same life insurance coverage. Why does this happen?\u003C/p>\u003Cp>This difference in premium rates is because of the policyholder’s age, health, and likely also lifestyle, habits, and pre-existing health conditions or risks. It can be surprising to most, but what you eat, how you live, the risks you take, and other lifestyle choices have some bearing or influence on your insurance premiums. This blog highlights major lifestyle factors affecting life insurance premiums.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Life Insurance Premiums\u003C/strong>\u003C/h2>\u003Cp>A life insurance premium is a predetermined one-time or consistent payment a policyholder makes to maintain the validity of a life insurance policy. Paying timely premiums ensures your family receives the policy benefits in the unfortunate event of your death.\u003C/p>\u003Cp>The premium concept appears straightforward, but insurers assess multiple factors to determine policy premiums for different individuals. While there are numerous factors affecting life insurance premiums, the following are the most prominent.\u003C/p>\u003Ch3>\u003Cstrong>Age\u003C/strong> \u003C/h3>\u003Cp>Older adults and seniors generally pay higher premiums than young individuals because the risk of death increases with age. Insurance providers levy higher premiums to cover this increased risk. Hence, life insurance planning should start at a young age.\u003C/p>\u003Ch3>\u003Cstrong>Gender\u003C/strong>\u003C/h3>\u003Cp>Insurance companies use statistical models to estimate how long an individual with a specific profile will live, influencing the premium rates. Since Indian female’s average life expectancy surpasses that of Indian males by 2.5%, women pay lower premiums than men.\u003C/p>\u003Ch3>\u003Cstrong>Lifestyle Choices\u003C/strong>\u003C/h3>\u003Cp>You may be subject to higher risk if you work in risky occupations like mining, construction, etc., or frequently engage in adventurous activities like scuba diving, paragliding, etc. If people with this risk profile buy \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">protection plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">child plans\u003C/a>, they’ll naturally pay higher premiums than those with a safer occupation and less adventurous lifestyle. For greater understanding, we have covered the major lifestyle choices that impact insurance premiums in a later section. \u003C/p>\u003Ch3>\u003Cstrong>Family Medical History\u003C/strong>\u003C/h3>\u003Cp>Family medical history gives insight into hereditary diseases or health conditions that may influence the policyholder’s life expectancy. You’ll be charged higher premiums if your family has a medical history of critical illness or diseases like diabetes, cancer, heart disease, etc. You can explore \u003Ca href=\\\"https://www.shriramlife.com/contact-us/faq\\\" target=\\\"_blank\\\">life insurance FAQs\u003C/a> to gain more insights about the critical illnesses or diseases affecting insurance premiums.\u003C/p>\u003Ch3>\u003Cstrong>Pre-Existing Conditions\u003C/strong>\u003C/h3>\u003Cp>All insurance companies count pre-existing conditions as among the factors for evaluating risk. This further varies on the type of pre-existing health conditions, their severity, and their impact on the proposed policyholder’s health. People with critical pre-existing conditions pay higher premiums than those with no pre-existing conditions. If you’re investing in the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a> to protect your family against financial uncertainties in case of your death, you may have to pay higher premiums if diagnosed with pre-existing conditions and vice-versa.\u003C/p>\u003Ch3>\u003Cstrong>Sum Assured\u003C/strong>\u003C/h3>\u003Cp>Higher sum assured leads to higher premium rates and vice-versa. You can use a reliable life insurance premium calculator to get near-accurate premium estimates based on the policy’s sum assured and other factors.\u003C/p>\u003Ch3>\u003Cstrong>Policy Term\u003C/strong>\u003C/h3>\u003Cp>The longer the insurance policy term, the higher the premium is. Extended policy terms increase the chance of insurance companies having to pay a claim, resulting in higher premiums. You can use our online life insurance premium calculator to get near-accurate premium estimates.\u003C/p>\u003Ch2>\u003Cstrong>Lifestyle Factors Affecting Premiums\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Health and Medical History\u003C/strong>\u003C/h3>\u003Cp>Your medical history and overall health, including existing health status, pre-existing health conditions, etc., significantly impact your premium rate. For example, insurers consider people with a family history of serious health diseases or pre-existing conditions signaling diabetes, hypertension, obesity, etc., risky. \u003Cbr />Some insurers may request a medical examination or detailed health records to assess an individual’s risk profile. The higher the individual’s risk profile, the higher the premiums are and vice-versa. You must follow health and wellness tips to improve your overall health, leading to lower insurance premiums.\u003C/p>\u003Ch3>\u003Cstrong>Smoking and Substance Use\u003C/strong>\u003C/h3>\u003Cp>Smoking and substance usage puts you at a higher risk of developing serious health challenges. Hence, insurance companies levy higher premiums on smokers and substance users compared to non-smokers. You can be classified as a smoker even if you smoke occasionally.\u003C/p>\u003Cp>Avoid lying to the insurer about your smoking habits because misleading with wrong information can get your policy cancelled and claims rejected. You can use our \u003Ca href=\\\"https://www.shriramlife.com/smoking-calculator\\\" target=\\\"_blank\\\">smoking calculator\u003C/a> to assess the financial cost of your smoking habit. This information can help you realize the extent of financial damages, giving you strong reasons to curb your smoking habit. \u003C/p>\u003Ch3>\u003Cstrong>Occupation and Hobbies\u003C/strong>\u003C/h3>\u003Cp>People working in occupations exposed to greater risk are charged higher premiums than people employed in safer professions/industries. For example, people working in industries like mining, oil, gas, construction, adventure sports, etc., are more exposed to risky environments that may result in death. Hence, their premiums charged on all \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings plans\u003C/a> are always higher than those charged to professionals with desk jobs. A similar rule applies to people with adventurous hobbies.\u003C/p>\u003Ch3>\u003Cstrong>Diet and Exercise\u003C/strong>\u003C/h3>\u003Cp>What you eat and how you treat your body is a significant lifestyle factor influencing your insurance premium. People leading a healthy lifestyle fueled by healthy eating, regular exercise, etc., are at a lower risk of developing health challenges. It translates to comparatively lower premiums.\u003C/p>\u003Cp>However, people with a sedentary lifestyle and unhealthy eating habits are subjected to higher premiums. If you want to improve the quality of your life, start following a healthy diet and regular exercise. Pair it with making the right investments in products like \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Shriram Life Assured Income Plan\u003C/a> to improve your family’s financial life during challenging times, when you’re not around.\u003C/p>\u003Ch2>\u003Cstrong>Steps to Lower Life Insurance Premiums\u003C/strong>\u003C/h2>\u003Cp>If you want to get lower life insurance premiums, you must work on improving your overall health and lifestyle. For example, if you’re a smoker, then make an effort to quit smoking. People with sedentary lifestyles must follow regular exercise routines and healthy eating habits to improve their health, attracting lower premiums.\u003C/p>\u003Cp>You can reduce your participation in risky activities and take consistent steps to lower your stress levels. Making these changes a part of your daily life will bring massive improvements in your health condition. It may give you further financial incentives by helping you save by bringing your premium to a normal risk level premium.\u003C/p>\u003Cp>Use this opportunity to get the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/wealth-pro\\\" target=\\\"_blank\\\">Shriram Life Wealth Pro plan\u003C/a> at a comparatively lower premium. This unit-linked plan can help you grow your investment while creating a financial safety net for your family in the unfortunate event that you’re not being around to provide for them. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Every decision we make regarding our eating habits, activity selection, etc., influences our lives in various ways. They affect our health, quality of life, and insurance premium rates. So, if you’re planning to secure your family under generous life insurance coverage, ensure you maintain a healthy lifestyle to attract lower insurance premiums. You can make healthy lifestyle adjustments by factoring in the points discussed above to enjoy the dual benefits of excellent health and lower premiums.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"How Life Insurance Can Support Long-Term Financial Goals\",\"heading\":\"How Life Insurance Can Support Long-Term Financial Goals?\",\"short_description\":\"\u003Cp>A term that helps us to save towards our life goals and manage life’s unexpected challenges along the way.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/26.%20India%27s%20Tax%20Structure_%20A%20Closer%20Look%20at%20Different%20Taxes_0.png?VersionId=BcD3jvV.kwwhYyi5L.foJWVYfHA5kyOR\",\"alt\":\"Life insurance- a part of long term financial goals\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-08T11:28:38\",\"updated_on\":\"2025-01-08T11:28:43\",\"read_more_title\":\"Know More\",\"slug\":\"/how-life-insurance-can-support-long-term-financial-goals\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>\",\"description\":\"\u003Cp>A term that helps us to save towards our life goals and manage life’s unexpected challenges along the way.\u003C/p>\u003Cp>When it comes to saving money, people generally fall into two categories: irregular and regular savers. Irregular savers save money whenever possible, thinking little about their retirement plans and future. However, regular savers are diligent people who invest their money in multiple ways, carefully planning to meet their financial goals and choosing investments to suit them.\u003C/p>\u003Cp>If you fall into the first category, you are not alone. The Economic Times reports that around 69% of Indian households struggle with financial insecurity. Likewise, a recent Reserve Bank of India survey highlights a sharp decline in India's net household savings, which dropped from 7.3% to 5.3% of GDP. Therefore, financial planning becomes very important in situations like these. Life Insurance is essential in long-term financial strategies, providing financial security for dependents in case of any unforeseen event. It also serves as a wealth-building tool and provides tax benefits, ensuring financial stability for the future. So, in this article, we shall learn why a Life Insurance policy is an important part of your long-term financial goals and how you can choose the one that fits your needs.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Life Insurance is a contract between an individual and an insurance company. In exchange for regular premium payments, the insurer guarantees a death benefit to the designated beneficiaries. The premiums vary depending on the policy type, the coverage amount, and the policyholder's age and health. The basic concept is to provide financial protection to the policyholder’s family or dependents in case of an untimely death, ensuring their financial security. \u003C/p>\u003Ch2>\u003Cstrong>Types of Life Insurance Policies\u003C/strong>\u003C/h2>\u003Cp>There are several types of Life Insurance policies available in India, each designed to meet different financial needs and goals. \u003C/p>\u003Ch2>\u003Cstrong>Term Insurance\u003C/strong>\u003C/h2>\u003Cp>Term Insurance is one of India's most affordable and widely chosen types of Life Insurance. It provides coverage for a specific period, such as 10, 20, or 30 years, and pays a death benefit if the insured passes away during the term. Term Insurance provides life cover without any maturity benefit, making it a cost-effective option. Shriram Life Insurance provides affordable Term Insurance plans such as \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/online-term-plan\\\" target=\\\"_blank\\\">Online Term plan \u003C/a>that provide high sum assured at competitive premiums.\u003C/p>\u003Ch2>\u003Cstrong>Whole Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Whole Life Insurance provides coverage for the entire lifetime. It includes a guaranteed death benefit and a cash value component that grows over time. Whole Life Insurance tends to have higher premiums than Term Insurance due to lifelong coverage and cash value accumulation. \u003Ca href=\\\"https://www.shriramlife.com/blog/advice/what-is-a-whole-life-insurance-policy-things-to-consider\\\" target=\\\"_blank\\\">Shriram Life's Whole Life Insurance plans\u003C/a> provide lifetime coverage and the added benefit of building cash value over time, making them a solid option for long-term financial security.\u003C/p>\u003Ch2>\u003Cstrong>Unit Linked Insurance Plans (ULIPs)\u003C/strong>\u003C/h2>\u003Cp>\u003Ca href=\\\"https://www.shriramlife.com/life-insurance/investment-plan\\\" target=\\\"_blank\\\">Unit Linked Insurance Plans (ULIPs)\u003C/a> combine Life Insurance with investment opportunities. A portion of the premium goes toward life coverage. At the same time, the remainder is invested in various funds, such as equity, debt, or hybrid funds, allowing the policyholder to potentially earn market-linked returns. ULIPs allow switching between funds based on your risk appetite and market conditions. Shriram Life provides a handy ULIP calculator, which helps you estimate return and maturity value.\u003C/p>\u003Ch2>\u003Cstrong>Endowment Plans\u003C/strong>\u003C/h2>\u003Cp>Endowment Plans such as New Shri Life Plan are designed to provide both Life Insurance and a savings component. These plans provide a guaranteed payout either on maturity or in the event of death, whichever comes first. They provide moderate savings along with life coverage. While Endowment Plans typically have higher premiums than Term Insurance, they provide a more balanced combination of insurance and savings. Shriram Life's \u003Ca href=\\\"https://www.shriramlife.com/blog/advice/what-is-an-endowment-plan-in-life-insurance\\\" target=\\\"_blank\\\">Endowment Plans\u003C/a> allow policyholders to build savings while ensuring financial protection for their loved ones.\u003C/p>\u003Ch2>\u003Cstrong>Child Insurance Plans\u003C/strong>\u003C/h2>\u003Cp>Child Insurance plans are designed to secure a child’s financial future, especially for education needs. These plans combine Life Insurance with savings, providing a maturity benefit that can be used for the child’s education or other future needs. Shriram Life provides \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">Child Insurance plans\u003C/a> that ensure financial protection for your child's future, helping you save for important milestones like education while providing life coverage.\u003C/p>\u003Ch2>\u003Cstrong>Retirement Plans\u003C/strong>\u003C/h2>\u003Cp>Retirement or pension plans are designed to provide a regular income after retirement. These plans provide life cover during the accumulation phase and a steady income stream once the policyholder retires. Retirement plans ensure financial security in the later years of life. \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">Shriram Life’s retirement plans\u003C/a> are tailored to help you build a corpus during your working years, ensuring a reliable income post-retirement.\u003C/p>\u003Ch2>\u003Cstrong>The Role of Life Insurance in Financial Planning\u003C/strong>\u003C/h2>\u003Cp>As a cornerstone of financial planning, a Life Insurance policy provides,\u003C/p>\u003Col>\u003Cli>Income replacement for your family\u003C/li>\u003Cli>Funds to cover outstanding debts and mortgages\u003C/li>\u003Cli>Money for your children's education expenses\u003C/li>\u003Cli>Resources for your spouse's retirement planning\u003C/li>\u003Cli>A financial cushion to fall back whenever you’re financially down\u003C/li>\u003C/ol>\u003Cp>That’s not where the benefit ends. A Life Insurance policy provides you with a measurable goal to work towards. It helps you focus on a clear objective—protecting your loved ones' financial future in your absence. A Life Insurance policy doesn’t need much money to start. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a> provides a cash bonus from your first policy anniversary until the end of your policy term. With the minimum sum assured being ₹1,50,000, it requires only a small part of your earnings. A Life Insurance plan is a foundational financial net since it jumpstarts your savings and improves your budgeting habits.\u003C/p>\u003Cp>Psychologically, a good Life Insurance plan gives you considerable peace of mind since there is always an emergency fund you can fall back on. It also teaches you to make thoughtful investing decisions instead of moving haphazardly.\u003C/p>\u003Ch2>\u003Cstrong>Achieving Financial Goals with Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Life Insurance can secure your investment and support your various financial goals. Here’s how\u003C/p>\u003Ch3>\u003Cstrong>1. Retirement Planning\u003C/strong>\u003C/h3>\u003Cp>Life Insurance helps your retirement planning by providing protection and providing a means to build wealth for the future. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/pension-plus\\\" target=\\\"_blank\\\">Shriram Life Pension Plus plan\u003C/a> can convert premium payments into a regular income stream during retirement, ensuring financial stability in your non-working years. Life Insurance policies are typically low-risk, ensuring guaranteed payouts and building a substantial retirement corpus. Additionally, Life Insurance addresses one of the biggest concerns of retirees: healthcare expenses, by helping cover medical costs for emergencies and preventive care. Moreover, Shriram Life Insurance plans provide tax benefits under Sections 80C and 10(10D) of the Income Tax Act, further maximizing your retirement savings.\u003C/p>\u003Ch3>\u003Cstrong>2. Savings for major life events\u003C/strong>\u003C/h3>\u003Cp>Using a general Life Insurance plan to save for significant expenses like your child's education, wedding, and other major life events is a viable strategy. Life Insurance policies, particularly endowment policies such as the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/new-shri-life-plan\\\" target=\\\"_blank\\\">New Shri Life Plan\u003C/a>, are designed for long-term savings and can help you accumulate a corpus over the years that can be used for these purposes. Additionally, the maturity benefits are tax-free under Section 10(10D), making it a tax-efficient way to save for your child's future. Many Life Insurance policies also provide a loan facility against the policy's surrender value, which can be helpful if you need immediate funds for education or wedding expenses without surrendering the policy. Depending on the type of policy, you can choose flexible payout options, such as a lump sum at maturity or periodic payments that align with milestones like your child's education or wedding.\u003C/p>\u003Ch3>\u003Cstrong>3. Wealth creation and investment\u003C/strong>\u003C/h3>\u003Cp>Life Insurance is often seen primarily as a financial backup, especially in the case of Term Insurance plans. However, Life Insurance can also be a powerful tool for investment and savings. It can help with capital appreciation and preservation, supporting your future financial goals. Life Insurance plans provide various benefits, including guaranteed life protection, tax savings, assured income, and both market and non-market-linked returns, making them versatile tools for achieving different financial objectives. You can use Life Insurance for goal-based investments, such as funding your child’s education, planning for retirement, purchasing a home, building emergency funds, and more. The key advantage of using Life Insurance for investments or savings is the flexibility to choose options that align with your risk appetite and investment budget. With various choices available, you can find a plan that best suits your needs. \u003C/p>\u003Ch2>\u003Cstrong>Benefits of Life Insurance for Long-Term Financial Security\u003C/strong>\u003C/h2>\u003Cp>Life Insurance provides significant benefits for long-term financial security, making it an essential tool for individuals looking to safeguard their family's future. In addition to providing financial protection, Life Insurance also provides attractive tax benefits. Premiums paid towards Life Insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act, reducing your taxable income. Furthermore, the maturity benefits or death benefit received by beneficiaries are generally tax-free under Section 10(10D), enhancing the overall value of your Life Insurance policy.\u003C/p>\u003Cp>Life Insurance also provides the opportunity to accumulate cash value over time, particularly in permanent Life Insurance policies such as whole and universal life. A portion of your premium goes towards building this cash value, which grows over time. Once you have accumulated enough cash value, you can access it through policy loans, withdrawals, or even use it as collateral for loans. These loans are typically flexible, allowing you to repay at your own pace. However, it’s important to note that if the loan exceeds the cash value or remains unpaid, it could affect your policy's status or reduce the death benefit.\u003C/p>\u003Cp>Furthermore, the cash value component can be used as a financial resource in times of need. You can withdraw funds from your policy for personal expenses or take a loan against the cash value to cover significant life events such as education or medical costs. While taking loans or withdrawals may reduce the death benefit, the ability to tap into the accumulated cash value provides added financial flexibility and helps support long-term goals like retirement or other large expenses.\u003C/p>\u003Ch2>\u003Cstrong>Real-Life Examples and Case Studies\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>1. Aditya Sharma’s Family and the Importance of Life Insurance (India)\u003C/strong>\u003C/h3>\u003Cp>Aditya Sharma, a professional from Kanpur, shares the pivotal role Life Insurance played in his family's financial security. His father, a disciplined saver, had always emphasized the importance of planning for unexpected events. Early in life, he chose a Life Insurance policy that would provide the necessary funds for the family in case something happened to him. Tragically, when Aditya’s father passed away, the Life Insurance policy was settled and provided critical financial support. Aditya and his brother were still in school, and this timely settlement ensured their education and living expenses were taken care of during the uncertain years that followed. Aditya credits this decision as the smartest financial move his father made, as it shielded the family from the harsh consequences of his untimely death.\u003C/p>\u003Ch2>\u003Cstrong>Choosing the Right Life Insurance Plan\u003C/strong>\u003C/h2>\u003Cp>When selecting a Life Insurance policy, making an informed decision that aligns with your financial goals is essential.\u003C/p>\u003Cp>\u003Cstrong>Here’s a walkthrough to help you choose the best policy:\u003C/strong>\u003C/p>\u003Cp>1. What are your financial goals: Are you securing your family’s financial future, saving for education, or ensuring retirement income? The right policy for you depends on your goals. \u003C/p>\u003Cp>2. To ensure your family’s needs are met, choose coverage at least 10-12 times your annual income, accounting for debts, liabilities, and future expenses. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Assured Income Plan\u003C/a> provides guaranteed income with a low premium payment.\u003C/p>\u003Cp>3. While affordability is important, ensure you’re getting adequate coverage and policy benefits. \u003Ca href=\\\"http://shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a> has multiple plans that help you choose the best one for you.\u003C/p>\u003Cp>4. The term should match the period your family will financially depend on you. For Term Insurance, subtract your current age from the age you expect to stop earning or achieve a major life goal.\u003C/p>\u003Cp>5. Select the Right Policy:\u003C/p>\u003Cul>\u003Cli>\u003Cstrong>Term Insurance:\u003C/strong> High coverage at affordable rates for a set period.\u003C/li>\u003Cli>\u003Cstrong>Endowment Plans:\u003C/strong> Combines Life Insurance with a savings component, providing a lump sum at maturity.\u003C/li>\u003Cli>\u003Cstrong>ULIPs:\u003C/strong> Flexible with investment options for long-term wealth accumulation.\u003C/li>\u003Cli>\u003Cstrong>Whole Life Insurance:\u003C/strong> Provides lifelong coverage with a cash value component.\u003C/li>\u003C/ul>\u003Cp>6. Your age, health, and lifestyle (e.g., smoking, drinking) influence premium costs. Younger, healthier individuals typically pay lower premiums.\u003C/p>\u003Cp>7. Know more about riders and other add-on benefits. For instance, riders like critical illness, accidental death, or waiver of premium can provide additional coverage, though they may increase your premium.\u003C/p>\u003Cp>8. Carefully read the policy details, including exclusions and limitations, to avoid surprises and ensure full transparency.\u003C/p>\u003Cp>9. If your policy includes a cash value component, know how it grows. This can be a valuable wealth-building tool over time.\u003C/p>\u003Cp>10. If you’re unfamiliar with Life Insurance, consider consulting a Shriram Life Insurance advisor to help you choose the most suitable policy based on your needs and financial goals.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>To summarize, Life Insurance is a critical component of long-term financial planning, providing benefits such as income replacement, debt coverage, and savings for major life events. Whether you're looking to protect your family's future, save for retirement, or accumulate wealth, there’s a Life Insurance policy to suit your needs. By carefully evaluating your financial goals, coverage amount, policy term, and type of policy, you can ensure that your Life Insurance choice aligns with your personal and family goals.\u003C/p>\u003Cp>We encourage you to consult with a financial advisor or Shriram Life Insurance expert today to make an informed decision tailored to your specific situation. Life Insurance isn’t just about protection—it’s a strategic tool to help secure your financial future. With products like the Shriram Life Assured Income Plan (AIP), you can enjoy guaranteed regular income, flexible policy terms, and the potential for bonus payouts, ensuring a steady income stream for the future. Additionally, the Shriram Early Cash Plan (ECP) combines life coverage with savings, providing dual financial protection benefits, a lump sum payout at maturity, and tax-saving advantages. Both plans are designed to help you achieve long-term financial goals while providing flexible premium payment options, making them ideal for securing your family’s future.\u003C/p>\u003Cp>Start planning today for a more secure tomorrow!\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"How to Choose Beneficiaries for Your Life Insurance Policy?\",\"heading\":\"How to Choose Beneficiaries for Your Life Insurance Policy?\",\"short_description\":\"\u003Cp>People buy Life Insurance policies to secure their family’s and other dependent’s financial future in the event of their untimely death.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/2.How%20to%20Choose%20Beneficiaries%20for%20Your%20Life%20Insurance%20Policy%20copy_0.webp?VersionId=oYq9U3B7o2fe0Bcrj0atDARCaajf.t.U\",\"alt\":\"Choosing beneficiary for life insurance\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-03T12:40:33\",\"updated_on\":\"2025-01-03T12:40:39\",\"read_more_title\":\"Know More\",\"slug\":\"/how-to-choose-beneficiaries-for-your-life-insurance-policy\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>\",\"description\":\"\u003Cp>People buy Life Insurance policies to secure their family’s and other dependent’s financial future in the event of their untimely death. However, the policy benefits can be useless to the family if the policyholder doesn’t appoint the correct insurance beneficiaries.\u003C/p>\u003Cp>If you want your family to live comfortably and meet all financial needs smoothly in case of the unfortunate event of your demise, then you must choose beneficiaries and add them to your policy when you purchase the plan. This Life Insurance guide covers more about beneficiaries, so your family doesn’t struggle with claiming the policy’s death benefits.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Beneficiaries\u003C/strong>\u003C/h2>\u003Cp>Before you proceed with naming beneficiaries in your policy, first understand who is eligible to become one. While most people choose individuals like their spouse, children, dependent parents, or other family members as insurance beneficiaries, some also choose a trust, business partner, or other entities.\u003C/p>\u003Cp>A Life Insurance policy beneficiary is legally entitled to receive the sum assured if a policyholder dies during the policy tenure. Before assigning beneficiary rights to anyone, remember that the beneficiaries in Life Insurance are of primarily two types:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Primary Life Insurance Beneficiary\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>A primary beneficiary is an individual who is legally entitled to receive the policy proceeds in the unfortunate event of a policyholder’s death. However, no proceeds can be claimed in his name if the primary beneficiary dies before the policyholder.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Secondary Life Insurance Beneficiary\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Also known as a contingent Life Insurance beneficiary, a secondary beneficiary refers to the individual who can claim policy proceeds if the primary beneficiary dies. There is a catch with contingent beneficiaries. They can only receive the beneficiary rights if the primary beneficiary dies before the policyholder.\u003C/p>\u003Ch2>\u003Cstrong>Factors to Consider When Choosing Beneficiaries\u003C/strong>\u003C/h2>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Family Members\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>When choosing Life Insurance beneficiaries, you must consider the family members dependent on you. A spouse, children, parents, siblings, and other relatives are common beneficiary choices. Consider the severity of the financial impact your family members may face in your absence, and choose the beneficiary accordingly. You can explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">Savings Plans\u003C/a>, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">Protection Plans\u003C/a>, and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/investment-plan\\\" target=\\\"_blank\\\">Investment Plans\u003C/a> to diversify and strengthen your financial well-being.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Financial Dependents\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can choose people financially dependent on you as the insurance beneficiaries. Parents, spouse, and children can only be listed in this case.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Charitable Organizations\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>If you want to give the policy proceeds to a trust or charitable organization, you must list its trustee as the beneficiary. The trustee can later claim the policy’s sum insured after your death.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Legal and Financial Implications\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Adding your family members or entities as beneficiaries in a Life Insurance Policy will give them legal rights to claim policy proceeds. They can receive direct payout into their account by avoiding potential legal complications like lengthy probate proceedings, complex estate planning proceedings, and other challenges. Beneficiaries will be subject to tax implications, depending on who the beneficiary is.\u003C/p>\u003Cp>For example, if a policyholder lists an estate as the beneficiary, their heirs must pay estate taxes. But if the beneficiary is a family member, then the death proceeds will be tax-free. If you invest in our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a> or other \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">Retirement Plans\u003C/a>, your spouse, children, parents, or other individual beneficiaries will receive tax benefits along with other advantages like returns powered by compounding, cash bonuses, etc.\u003C/p>\u003Ch3>\u003Cstrong>Updating Beneficiaries\u003C/strong>\u003C/h3>\u003Cp>Naming beneficiaries and updating them is crucial because it ensures the right beneficiaries receive the policy’s death benefits without any challenges. You shouldn’t add the beneficiary once and forget if you have a Life Insurance Policy. For example, if you purchased the policy when you were single, you would have listed your parents as the primary beneficiaries.\u003C/p>\u003Cp>But after your marriage, you must also include your spouse in the beneficiary list. Children can also be included after you become a parent. Similarly, you will need a beneficiary change in case of the unfortunate demise of the previously listed beneficiaries or the event of an unexpected event such as legal separation/divorce of spouses. It is important to plan your beneficiary list and update them as needed.\u003C/p>\u003Ch2>\u003Cstrong>Common Mistakes to Avoid\u003C/strong>\u003C/h2>\u003Cp>Some policyholders unknowingly make mistakes while listing their Life Insurance beneficiaries, leading to disputes during claim processing. If you don’t want your family to experience something similar, ensure you avoid making the following common mistakes.\u003C/p>\u003Ch3>\u003Cstrong>Naming a Minor as Beneficiary\u003C/strong>\u003C/h3>\u003Cp>If you list children aged below 18 as your beneficiaries and you die before they become adults, then insurance companies will not give policy proceeds to them. You can list a legal guardian or custodian for the child to manage money on your child’s behalf until your kids reach 18 years of age.\u003C/p>\u003Ch3>\u003Cstrong>Not Being Specific\u003C/strong>\u003C/h3>\u003Cp>Policyholders who have children from their previous marriage and current marriage should be specific while listing their beneficiaries. Instead of listing ‘my children’ as beneficiaries, mention the name of the children for clarity. It will avoid confusion at a later stage. The specificity rule should be followed by every policyholder, especially by people with complex family dynamics.\u003C/p>\u003Ch3>\u003Cstrong>Not Selecting a Contingent Beneficiary\u003C/strong>\u003C/h3>\u003Cp>Life is unpredictable, so you must choose beneficiaries accordingly. Instead of only choosing a primary beneficiary, list a contingent (secondary) beneficiary to ensure policy proceeds are received even if the primary beneficiary dies before the policyholder.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>People invest in Life Insurance policies so their dependents don’t face financial hardships after their death. However, the intended purpose of policy purchase cannot be fulfilled if the right beneficiaries aren’t listed in the policies. If you want your family or other dependents to live a life of ease and comfort when you’re not around, always list rightful beneficiaries. You must also review and update them from time to time, especially after events like a wedding, childbirth, divorce, etc.\u003C/p>\u003Cp>If you have finalized your beneficiaries and are looking for good policies to secure your family’s financial future, consider exploring our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Shriram Life Assured Income Plan\u003C/a>. It features multiple benefits, such as assured income, additional protection, higher benefits for higher premiums, etc. You can contact \u003Ca href=\\\"https://www.shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a> to seek guidance in choosing the right plan aligned with your financial goals.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"What is Life Insurance and How Does It Work?\",\"heading\":\"What is Life Insurance and How Does It Work?\",\"short_description\":\"\u003Cp>Life insurance is a type of financial protection you buy to support your loved ones if something happens to you.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/1.What%20is%20Life%20Insurance%20and%20How%20Does%20It%20Work__0.jpeg?VersionId=Xi69AartuVivJOMki1QrAFRIyI9QaDVU\",\"alt\":\"What is Life Insurance and How does it work?\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-02T12:05:36\",\"updated_on\":\"2025-01-02T12:05:42\",\"read_more_title\":\"Know More\",\"slug\":\"/what-is-life-insurance-and-how-does-it-work\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>\",\"description\":\"\u003Cp>Life insurance is a type of financial protection you buy to support your loved ones if something happens to you. It’s a contract between you and an insurance company: you pay a certain amount of money (called a premium) regularly, and in return, the insurance company promises to pay a certain sum of money (called a death benefit) to your beneficiaries in case of the unfortunate event of death.\u003C/p>\u003Cp>Life insurance aims to provide financial support to people who depend on you (the beneficiaries), such as your family, in the unfortunate case of you no longer being there to provide for them. There are different types of life insurance, but the basic idea is to ensure your family won't struggle financially after you’re gone. In this article, let us see how life insurance works and what are the different criteria needed to get life insurance for you and your family members.\u003C/p>\u003Ch2>\u003Cstrong>What Is Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Now that we understand what Life Insurance Policy is, consider the following example.\u003C/p>\u003Cp>Let us assume that Mr. Yash buys a Life Insurance Policy from \u003Ca href=\\\"https://www.shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a>. He opts for a 20-year term policy with a sum assured of ₹10 lakhs and agrees to pay an annual premium of ₹25,000 for the full 20 years.\u003C/p>\u003Cp>Here’s how his policy would work:\u003C/p>\u003Ch3>\u003Cstrong>If Mr. Yash completes the Policy Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>Over the 20 years, he has paid a total of ₹5 lakhs in premiums.\u003C/li>\u003Cli>At the end of the 20 years, Mr. Yash will receive the maturity benefit of ₹10 lakhs (the sum assured) plus any bonus or investment returns if applicable.\u003C/li>\u003Cli>The policy will end once the maturity benefit is paid out.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>In case of the unfortunate demise of Mr. Yash Dies during the 10th Policy Year\u003C/strong>\u003C/h3>\u003Col>\u003Cli>By the 10th year, Mr. Yash has paid a total of ₹2.5 lakhs in premiums.\u003C/li>\u003Cli>In the unfortunate case of his death, his family or nominees will receive ₹10 lakhs (the sum assured) plus any bonus (if applicable).\u003C/li>\u003Cli>The policy will terminate after the death benefit is paid.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>If Mr. Yash opts for Premium Protection in the Policy\u003C/strong>\u003C/h3>\u003Col>\u003Cli>In the unfortunate event of Mr. Yash passing away in the 10th year, his family will receive the death benefit of ₹10 lakhs immediately.\u003C/li>\u003Cli>The policy will continue accumulating the investment value, typically linked to the insurer's fund performance.\u003C/li>\u003Cli>At the end of the 20-year term, the insurer will pay the promised maturity benefit of ₹10 lakhs (sum assured) plus any applicable bonus to the beneficiaries or as a lump sum to Mr. Yash’s family.\u003C/li>\u003C/ol>\u003Ch2>\u003Cstrong>Types of Life Insurance\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Term Life Insurance\u003C/strong>\u003C/h3>\u003Cp>Term Life Insurance is a type of life insurance policy that provides coverage for a specific period, typically 10 to 30 years. When you purchase a term life insurance policy, you agree to pay premiums for the duration of the term. In return, the insurance company will provide a benefit to your beneficiaries if an unfortunate event occurs during the policy term. Term Life Insurance is often more affordable than permanent insurance, making it an attractive option for people who want financial protection for their loved ones without high costs. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/online-term-plan\\\" target=\\\"_blank\\\">Shriram Online Term Plan\u003C/a> provides women with great payout options, superior coverage, and lower premium options.\u003C/p>\u003Cp>The main benefits of Term Life Insurance \u003Cspan>such as \u003C/span>\u003Ca href=\\\"https://www.shriramlife.com/life-insurance/family-protection-plan\\\">\u003Cspan>Shriram Life Family Protection Plan\u003C/span>\u003C/a>\u003Cspan> \u003C/span>are its affordability, flexibility, and financial protection for your family. It provides your beneficiaries with a lump sum or income if you die during the policy term. You can also add riders to your policy for extra coverage, such as protection for critical illness or accidental death. Additionally, the premiums for Term Life Insurance may be tax-deductible, and your family's death benefit is generally tax-free.\u003C/p>\u003Ch3>\u003Cstrong>Whole Life Insurance\u003C/strong>\u003C/h3>\u003Cp>Whole Life Insurance is a type of life insurance that provides coverage for your entire lifetime as long as you continue to pay the premiums. It combines a death benefit with a cash value component, which grows over time. One of the key benefits of Whole Life Insurance is the cash value, which accumulates on a tax-deferred basis. This cash value can be borrowed against or withdrawn for various needs or even used to pay premiums. Additionally, it provides a tax-free benefit to your beneficiaries. However, whole life insurance requires a long-term commitment. So, it is prudent to speak with a financial professional before opting for one.\u003C/p>\u003Ch2>\u003Cstrong>What Affects Your Life Insurance Premiums and Costs?\u003C/strong>\u003C/h2>\u003Cp>Several factors determine your life insurance premiums, reflecting the insurer's assessment of your risk profile. Key factors include:\u003C/p>\u003Ch3>\u003Cstrong>1. Age\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>Younger individuals pay lower premiums due to a lower risk of early death and fewer health issues.\u003C/li>\u003Cli>Older individuals face higher premiums due to increased health risks.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>2. Health\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Current health: \u003C/strong>Healthier individuals pay lower premiums, while those with chronic conditions face higher costs.\u003C/li>\u003Cli>\u003Cstrong>Family medical history:\u003C/strong> A history of hereditary diseases may increase premiums.\u003C/li>\u003Cli>\u003Cstrong>BMI: \u003C/strong>A healthy BMI can reduce premiums, as obesity increases health risks.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>3. Lifestyle\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Smoking: \u003C/strong>Smokers pay higher premiums due to the risk of smoking-related illnesses.\u003C/li>\u003Cli>\u003Cstrong>Alcohol: \u003C/strong>Excessive drinking raises premiums due to risks like liver disease.\u003C/li>\u003Cli>\u003Cstrong>Risky activities:\u003C/strong> Engaging in high-risk hobbies or jobs increases premiums due to accident potential.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>4. Gender\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>Women generally pay lower premiums due to longer life expectancy.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>5. Policy Details\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Coverage amount: \u003C/strong>Higher coverage and permanent policies result in higher premiums due to extended benefits.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>6. Occupation\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>High-risk jobs: \u003C/strong>Dangerous professions, such as construction or aviation, lead to higher premiums.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Life Insurance Buying Guide\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Step-by-Step Guide to Purchasing Life Insurance:\u003C/strong>\u003C/h3>\u003Ch4>Step 1: Calculate How Much Coverage You Need\u003C/h4>\u003Cp>Start by estimating how much life insurance your family will need. A common rule is \u003C/p>\u003Cp>Coverage = (Annual Income × 10–15) + Debts + Future Costs + Living Expenses − Savings − Investments\u003C/p>\u003Cp>This ensures your family can maintain their lifestyle and meet financial needs if something happens to you. You can visit Shriram Life Insurance plans to see which plans would suit your financial goals better.\u003C/p>\u003Ch4>Step 2: Gather Documents for Your Application\u003C/h4>\u003Cp>Prepare essential documents like a photo ID, address proof, and social security number (your Aadhar number). Collect medical history details, including existing conditions, medications, and surgeries. Have information about your job, income, and financial situation ready, such as pay stubs and tax returns. If you already have life insurance policies, keep those details on hand. Be honest, as inaccuracies can delay approval.\u003C/p>\u003Ch4>Step 3: Compare Policy Options\u003C/h4>\u003Cp>Request quotes from different insurers. Don’t just look at the price—compare coverage, benefits, and the company’s reliability. Understand the differences between term life, whole life, and universal life policies. Look into riders, conversion options, and potential premium changes. A financial advisor can help you pick a policy that balances affordability with strong coverage for your family.\u003C/p>\u003Ch2>\u003Cstrong>Who can benefit from a life insurance policy?\u003C/strong>\u003C/h2>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cstrong>Key Group\u003C/strong>\u003C/td>\u003Ctd>\u003Cstrong>Explanation\u003C/strong>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Families\u003C/td>\u003Ctd>Life insurance can ensure financial security for your spouse and children, especially if you are the primary income earner.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Individuals with Debts\u003C/td>\u003Ctd>If you have significant debts, life insurance can help pay them off, preventing financial hardship for your loved ones.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd rowspan=\\\"4\\\">Business Owners\u003C/td>\u003Ctd>Life insurance can be used to:\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Protect business continuity: Provide funds to replace key employees or cover business debts.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Fund buy-sell agreements: Ensure a smooth transition of ownership in the event of a partner's death.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Provide liquidity for estate taxes: Pay estate taxes and avoid forced asset sales.\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>What to Do Before Buying Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Before purchasing a Life Insurance Policy, it is important to analyze the death benefits and other financial obligations and goals. Let's break down the key factors:\u003C/p>\u003Ch3>\u003Cstrong>Immediate Needs\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Medical Bills: \u003C/strong>Any outstanding medical bills or final medical expenses should be accounted for.\u003C/li>\u003Cli>\u003Cstrong>Debt Repayment:\u003C/strong> This includes mortgages, car loans, credit card debt, and other outstanding loans.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>Long-Term Needs.\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Income Replacement:\u003C/strong> Calculate the income your family relies on and determine how long they might need that income.\u003C/li>\u003Cli>\u003Cstrong>Childcare Costs: \u003C/strong>If you have young children, factor in the cost of childcare until they reach adulthood.\u003C/li>\u003Cli>\u003Cstrong>Education Costs: \u003C/strong>Consider tuition, fees, and living expenses for your children's education.\u003C/li>\u003Cli>\u003Cstrong>Retirement Savings: \u003C/strong>If your death could impact your spouse's \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a>, factor in the amount needed to maintain their desired lifestyle.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>A More Detailed Approach\u003C/strong>\u003C/h3>\u003Cp>While the 10-15 times annual income rule is a useful starting point, a more accurate assessment involves a detailed financial analysis.\u003C/p>\u003Cp>Here's a suggested approach:\u003C/p>\u003Cp>1. \u003Cstrong>Create a Financial Inventory:\u003C/strong> List all your assets, debts, and monthly expenses.\u003C/p>\u003Cp>2. \u003Cstrong>Estimate Future Expenses: \u003C/strong>Project future costs, such as college tuition and retirement savings.\u003C/p>\u003Cp>3. \u003Cstrong>Consider Inflation: \u003C/strong>Account for the rising cost of living over time.\u003C/p>\u003Cp>4. \u003Cstrong>Consult a Financial Advisor: \u003C/strong>A professional can help you assess your needs and recommend the appropriate coverage.\u003C/p>\u003Ch2>\u003Cstrong>How Life Insurance Works\u003C/strong>\u003C/h2>\u003Cp>\u003Cstrong>Death Benefit: \u003C/strong>The core component of life insurance is the death benefit, a lump sum payment made to your beneficiaries upon death. This payment can help cover final expenses, and debts, and provide ongoing financial support for your loved ones.\u003C/p>\u003Cp>\u003Cstrong>Premium: \u003C/strong>A premium is the regular payment you make to the insurance company to maintain your policy. The premium amount is determined by several factors, including:\u003C/p>\u003Cul>\u003Cli>Age\u003C/li>\u003Cli>Health\u003C/li>\u003Cli>Occupation\u003C/li>\u003Cli>Lifestyle\u003C/li>\u003Cli>Policy Type\u003C/li>\u003C/ul>\u003Cp>\u003Cstrong>Cash Value (Permanent Life Insurance Only):\u003C/strong> A portion of your premium in a permanent life insurance policy accumulates over time, creating a cash value. \u003C/p>\u003Cp>This cash value can be:\u003C/p>\u003Cul>\u003Cli>\u003Cstrong>Borrowed Against: \u003C/strong>You can borrow against the cash value, but interest will accrue on the loan.\u003C/li>\u003Cli>\u003Cstrong>Withdrawn: \u003C/strong>You can withdraw funds from the cash value, which may reduce the death benefit.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Life Insurance Riders and Policy Changes\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Policy Customizations:\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Riders:\u003C/strong> Additional coverage options that can be added to your policy, such as:\u003Cul>\u003Cli>Accidental Death Benefit.\u003C/li>\u003Cli>Critical Illness Rider.\u003C/li>\u003Cli>Long-Term Care Rider.\u003C/li>\u003Cli>Waiver of Premium Rider.\u003C/li>\u003C/ul>\u003C/li>\u003Cli>\u003Cstrong>Policy Changes:\u003C/strong> You may be able to make changes to your policy, such as increasing or decreasing the death benefit or adding or removing riders.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Qualifying for Life Insurance\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Eligibility Criteria:\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Age:\u003C/strong> Most insurers have minimum and maximum age limits.\u003C/li>\u003Cli>\u003Cstrong>Health: \u003C/strong>Your health history and current health condition can affect your eligibility and premium rates.\u003C/li>\u003Cli>\u003Cstrong>Occupation: \u003C/strong>Hazardous occupations may require additional underwriting or higher premiums.\u003C/li>\u003Cli>\u003Cstrong>Lifestyle: \u003C/strong>Factors like smoking and excessive alcohol consumption can impact your eligibility.\u003C/li>\u003C/ul>\u003Cp>In conclusion, life insurance is a valuable tool for financial security. By understanding the different types of policies, factors affecting premiums, and the steps involved in purchasing life insurance, you can make informed decisions to protect your loved ones. Remember to assess your specific needs, compare policies from different insurers, and consult a financial advisor to ensure you have the right coverage. By taking these steps, you can know that your family's financial future is secure.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"Tax Saving Benefit: How Life Insurance Can Help You Save\",\"heading\":\"Tax Saving Benefit: How Life Insurance Can Help You Save\",\"short_description\":\"\u003Cp>People invest in Life Insurance to financially secure their family, in case of unfortunate circumstances of them not being there.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/46.%20Tax%20Saving%20Benefit_%20How%20Life%20Insurance%20Can%20Help%20You%20Save_0.png?VersionId=D6uTTAJ02IyULHL7CkAhId58AlT2k4He\",\"alt\":\"Tax Saving Benefit: How Life Insurance Can Help You Save\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-01T09:20:58\",\"updated_on\":\"2025-01-01T09:21:05\",\"read_more_title\":\"Know More\",\"slug\":\"/how-life-insurance-can-help-you-save-tax\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/savings\\\" hreflang=\\\"en\\\">Savings\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>, \u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>\",\"description\":\"\u003Cp>People invest in Life Insurance to financially secure their family, in case of unfortunate circumstances of them not being there. However, this investment also provides Life Insurance tax benefits. You can enjoy plenty of tax benefits if you strategize your investments and choose the right Life Insurance, sum assured, and premium amount. This blog explains how policyholders can reduce tax liabilities and optimize returns using the right tax-saving strategies. \u003C/p>\u003Ch2>\u003Cstrong>What is Life Insurance and How Does it Work?\u003C/strong>\u003C/h2>\u003Cp>Before we get into the details of Life Insurance tax benefits, let’s start by understanding what Life Insurance is and how it works. If you’re beginning your investment journey, start by choosing the right Life Insurance Plan. This plan takes care of your family’s financial future in case of your death. \u003C/p>\u003Cp>You pay premiums for a specific period determined in the policy, and in return, the insurer releases the accumulated funds in the form of maturity or death proceeds. Many people include Life Insurance in financial planning because it provides dual tax savings and financial security benefits. At Shriram Life Insurance, we provide a wide range of \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">protection plans\u003C/a> that feature insurance coverage paired with other benefits.\u003C/p>\u003Ch2>\u003Cstrong>What are the Life Insurance Tax Benefits?\u003C/strong>\u003C/h2>\u003Cp>All Life Insurance policies in India enable policyholders to save taxes by deducting the amount paid towards premiums in their income tax returns. These tax deductible premiums help lower tax liability for a particular financial year while accumulating Life Insurance coverage benefits for their family. \u003C/p>\u003Cp>If you want to do strategic tax planning with Life Insurance, always remember that tax benefits are available in two forms: Tax deductions and tax exemptions.\u003C/p>\u003Cp>\u003Cstrong>Tax deductions \u003C/strong>refer to the amount you can deduct from your Gross Total Income (GTI) while filing the income tax return. It can significantly reduce the amount of tax payable. Tax deductible premiums can be claimed under different sections of the Income Tax, 1961, which are covered later in this article.\u003C/p>\u003Cp>\u003Cstrong>Tax exemptions\u003C/strong> are another important aspect of tax benefits. Tax exemptions refer to the part of your insurance earnings or proceeds that are naturally exempted from tax. For instance, tax-free death benefits come under tax exemption, not deduction. \u003C/p>\u003Ch2>\u003Cstrong>How to Save Income Tax with a Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>The multiple features of Life Insurance for saving are frequently discussed among working individuals, but its tax benefits aren’t talked about enough. If you have an insurance policy or are planning to buy one, you can enjoy tax savings at the following stages:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Entry Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>At this stage, you can deduct the amount paid towards the policy’s premium under relevant sections for tax savings. For example, if you have paid ₹ 50,000 as a Life Insurance premium in one financial year, you can claim the whole amount as deduction u/s 80C. It is among the most common tax-saving techniques for salaried employees and self-employed individuals. Tax savings through section 80C are for Life Insurance, 80D is for health insurance, and 80CCC is for pension plans. We will discuss these sections in detail later in this article. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Earnings Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Since most Life Insurance policies have a long-term tenure, your investment keeps growing because of the power of compounding. The best part is the earnings during this stage are non-taxable, provided you don’t withdraw them prematurely. If you invest in our unit-linked \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> or \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">child plans\u003C/a>, you can enjoy growth over a period without worrying about paying taxes on the earned amount. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Exclusive Switching Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can enjoy tax-free switching if you want to switch between your investments in unit-linked insurance plans. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Exit Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>It is the last stage of your policy, where you begin to receive payouts or proceeds from the insurer. Most proceeds are exempted from tax u/s 10 (10D), subject to certain conditions. You can get detailed information about 10(10D) tax benefits in the following section.\u003C/p>\u003Ch2>\u003Cstrong>Tax Benefits on Life Insurance Policies Under Different Sections of the Income Tax Act, 1961\u003C/strong>\u003C/h2>\u003Cp>You can get Life Insurance tax benefits under different yet relevant sections of the Income Tax Act, 1961. Most deductions fall under the following sections:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80C\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Policyholders can claim a deduction for the amount paid towards insurance premium u/s 80C, up to a maximum limit of ₹ 1.50 lakh per annum. The Tax Benefit of 80C can be availed if the premium exceeds 10% of the policy’s sum assured amount, then tax will be levied proportionally. If you invest in our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a>, you can enjoy tax-deductible premiums u/s 80C. This plan provides life coverage with added benefits such as a cash bonus guarantee, wealth creation through compounding, capital guarantee, and more. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80D\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Policyholders who have invested in health insurance plans can claim the premium payment amount as a deduction u/s 80D. The deduction is capped at ₹25,000 per annum, but you can claim an additional ₹25,000 per annum if you’ve taken a policy for your parents. You can claim ₹50,000 per annum as a deduction if your parents are senior citizens.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 10(10D)\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>This section ensures that the proceeds received by nominees in case of the policyholder’s death are fully exempt from tax. Any attached incentives or surrendering value is also exempted from tax. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80CCC\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can claim deductions toward the premium paid for designated pension plans. The deductions are capped at a combined limit of ₹1.50 lakh per annum u/s 80C and 80CCD(1). If you surrender the policy prematurely, then the amount received on surrendering will be taxable as regular income. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 10 (10A)\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>The accumulated (commuted) pension amount received by government employees are exempted from tax u/s 10(10A). However, an uncommuted or monthly pension is taxable as a regular salary.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80CCE\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>This section limits the total eligible deduction amount to ₹1.50 lakh per annum for multiple policyholders. The limit includes combined total deductions u/s section 80C, 80CCC, and 80CCD(1). \u003C/p>\u003Ch2>\u003Cstrong>What are the Potential Tax Benefits on Riders of Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Riders are great tools to enhance the coverage of a standard Life Insurance policy, but they also contribute to tax savings. According to Section 80D, if you buy a term insurance plan with health-related riders like hospital care rider, critical illness, surgical care, etc., you can get a deduction of up to ₹25,000. You can get an additional ₹25,000 deduction limit on similar plans purchased for parents. \u003C/p>\u003Cp>This limit is further increased to ₹50,000 if you’re buying policies for parents aged 60+/senior citizens. Hence, always evaluate different tax saving strategies before investing in any plan. You must explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/premier-assured-benefit-plan\\\" target=\\\"_blank\\\">Shriram Life Premier Assured Benefit Plan\u003C/a> if you want to buy a Life Insurance that provides higher returns for higher premiums and also helps you save tax on riders. It is one of our best savings plans that also provide life coverage and various other benefits. \u003C/p>\u003Ch2>\u003Cstrong>What is TDS on Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>Tax Deducted at Source (TDS) is generally charged on eligible financial products, including insurance plans, potentially lowering the maturity proceeds. If you receive payouts of more than ₹1,00,000 upon policy maturity, then the insurer will deduct a 5% TDS before releasing the funds. No TDS on Life Insurance will be deducted if the amount is lower than ₹1,00,000.\u003C/p>\u003Cp>Additionally, no TDS will be deducted if the plan falls u/s 10(10D), premium payment doesn’t exceed 10% of the sum assured value (for policies purchased after 1st April 2021), or the amount is received u/s 80DD(3) or 80DDA(3). If you purchased the plan between 1st April 2003 and 31st March 2012, then TDS on Life Insurance won’t be deducted if the premium payments don’t exceed 20% of the policy’s total sum assured. \u003C/p>\u003Ch2>\u003Cstrong>What is GST on Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>Goods and Services Tax, a.k.a. GST, is an indirect tax imposed on certain goods and services. Policyholders pay a flat 18% GST on all insurance policy premiums. Previously, policyholders paid a 15% service tax, including the Krishi Kalyan cess and Swachh Bharat cess. It has not been replaced by GST. \u003C/p>\u003Ch3>\u003Cstrong>Eligibility Criteria to Claim Life Insurance Tax Benefits\u003C/strong>\u003C/h3>\u003Cp>Life Insurance tax benefits are available to all individuals and Hindu Undivided Families (HUFs). They can claim tax benefits on premium payments and maturity proceeds under relevant sections of the Income Tax Act, 1961. \u003C/p>\u003Ch3>\u003Cstrong>Tax Benefits for Single Premium Insurance Policies\u003C/strong>\u003C/h3>\u003Cp>Single premium insurance policies are also eligible for tax deductions u/s 80C. The premium paid on these policies can be claimed as a deduction u/s 80C. The only difference between single premium and multiple premium policies is that the former only gets one tax deduction in the payment year, whereas the policyholder can enjoy deductions on multiple premium payments every year. As discussed above, the maturity proceeds are taxed as any other insurance policy.\u003C/p>\u003Ch3>\u003Cstrong>Advantages and Tax Implications of Exiting a Life Insurance Policy\u003C/strong>\u003C/h3>\u003Cp>The biggest advantage of exiting a Life Insurance policy is getting instant funds to meet unexpected, immediate expenses. The tax implications will depend on the policy type, amount, number of premiums paid to date, how long you held the policy, and various other factors. \u003Cbr />For example, if you surrender an endowment insurance plan, you only enjoy tax benefits if you’ve paid the premiums for the first two years. In the case of ULIP, tax benefits will only apply if you surrender the policy after five years. So, always check the type of policy you have to determine the relevant tax implications. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Life Insurance is a must-have investment for every individual because it ensures the policyholder’s financial future is secured and stable. While these plans are primarily designed for financial security, they also provide tax benefits to all policyholders. You can use the information discussed in this article to plan effective tax savings strategies for optimal benefits. You can also invest in Shriram Life Insurance plans to enjoy dual benefits of life cover and tax benefits.\u003C/p>\u003Cp>If you want to build wealth over time while maintaining secure life coverage, then you must explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Shriram Life Assured Income Plan\u003C/a>. It provides numerous benefits like flexible premiums, additional protection, assured income, etc., in addition to tax savings. We have various plans designed for protection, savings, retirement, etc., so explore all and invest in the ones that seamlessly align with your financial goals.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"What are the different types of investments in India? How do they work?\",\"heading\":\"What are the Different Types of Investments in India? How do they Work?\",\"short_description\":\"\u003Cp>Investing in the right financial products and plans is the wisest way to build wealth over time, outpace inflation, and achieve your financial goal\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2024-12/42.%20What%20are%20the%20different%20types%20of%20investments%20in%20India_%20How%20do%20they%20work__0.png?VersionId=gDVzrbzp8juMdFIdnvDDjEgFYKfvm8bH\",\"alt\":\"How do different types of investments in India\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2024-12-31T10:54:11\",\"updated_on\":\"2024-12-31T10:54:24\",\"read_more_title\":\"Know More\",\"slug\":\"/different-types-of-investments-in-india\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/investments\\\" hreflang=\\\"en\\\">Investments\u003C/a>\",\"description\":\"\u003Cp>Investing in the right financial products and plans is the wisest way to build wealth over time, outpace inflation, and achieve your financial goals. The biggest roadblock people face while beginning their investment journey is choosing the right investment options. Since the Indian financial market has grown significantly, it now provides different types of investments in India. This article covers the top investment options in India, so you have a good starting point for your investment journey. So, let’s explore the top and most common investment options shared below:\u003C/p>\u003Ch2>\u003Cstrong>Stocks\u003C/strong>\u003C/h2>\u003Cp>Also known as equities, stocks are certificates of ownership in a company. After carefully evaluating the company profile, market conditions, and other economic factors, you can purchase stocks from stock exchanges, like the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), etc. Buying a share is similar to purchasing a portion of the company, making you eligible to benefit from its growth and profits. \u003C/p>\u003Cp>Investors can benefit from stock investments by selling the shares at a higher price when share prices rise and receiving dividends from the company’s profits. Stocks are among the riskiest types of investments in India because of market volatility, but they also have higher return potential. \u003C/p>\u003Ch2>\u003Cstrong>Bonds\u003C/strong>\u003C/h2>\u003Cp>Bonds are debt instruments issued to raise money from the market for a predetermined period. When you invest in bonds in India, you’re lending money to the bond issuer for a specific period. You get rewarded for this investment by receiving fixed or varying interests at predetermined intervals, depending on the bond type and issuer. You also receive the original investment (principal) amount back upon maturity. \u003C/p>\u003Cp>Bond investments are relatively safer than stocks because they provide a more predictable return as interest. If you’re looking for investment with good returns, search for bonds issued by governments, reliable corporations, or entities with good credit ratings. Alternatively, you can invest in safer bonds via debt mutual funds.\u003C/p>\u003Ch2>\u003Cstrong>Real Estate\u003C/strong>\u003C/h2>\u003Cp>Real estate is among the most common types of investment people make to generate profit. If you have enough capital, you can purchase properties and give them on rent for a fixed monthly rental income. People who don’t like the hassle of finding tenants and managing properties can invest in Real Estate Investment Trusts (REITs).\u003C/p>\u003Cp>If you’re new to REITs, then refer to companies that own and operate income-generating properties. Investing in REITs makes you eligible to receive a percentage of profits. You can explore other avenues to earn profits from real estate that align with your financial goals, risk profile, and lifestyle.\u003C/p>\u003Ch2>\u003Cstrong>Fixed Deposits\u003C/strong>\u003C/h2>\u003Cp>Conservative investors looking for the safest types of investment decisions may consider investing in fixed deposits. It is a secure agreement wherein you agree to deposit a fixed amount of money for a specific tenure in exchange for fixed interest income. All banks and similar financial institutions provide fixed deposits. The most notable benefits of investing in fixed deposits are their safety and stability. You will still receive the fixed interest income even if market conditions become volatile.\u003C/p>\u003Ch2>\u003Cstrong>Mutual Funds\u003C/strong>\u003C/h2>\u003Cp>Mutual funds are a basket of investments comprising diversified portfolio assets like stocks, bonds, and other financial securities. When you invest in these funds, you essentially gain ownership of a portion of the fund’s assets. All returns from mutual funds are based on the fund’s performance.\u003C/p>\u003Cp>Since professional fund managers manage them, you don’t have to independently research different stocks and securities before investing. Mutual funds provide diversification, liquidity, and ease of investment through a Systematic Investment Plan (SIP), making them a desirable investment option for most busy individuals.\u003C/p>\u003Ch2>\u003Cstrong>Public Provident Fund (PPF)\u003C/strong>\u003C/h2>\u003Cp>It is one of the safest types of investments in India because the Indian government regulates it. Public Provident Fund (PPF) is a long-term investment option designed to support people’s retirement years. Investors can invest in PPF during their working years for a specific duration. In exchange, they receive a fixed income during their retirement years. PPF plans generally have a long lock-in period and provide tax deduction benefits u/s 80 C. If you want to diversify your investment options, you can explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> and savings plans.\u003C/p>\u003Ch2>\u003Cstrong>National Pension System (NPS)\u003C/strong>\u003C/h2>\u003Cp>Anyone wanting to create a secure income stream for retirement years must consider the National Pension System (NPS). It is among the safest types of investment you can have in your portfolio. Any Indian citizen aged 18 to 65 can invest in NPS. When you contribute to NPS, professional fund managers invest the amount in equity, bonds, and a mix of securities per your chosen investment plan. This investment grows over time, and the accumulated amount is used to give you a pension after retirement.\u003C/p>\u003Ch2>\u003Cstrong>Unit-Linked Insurance Plans (ULIP)\u003C/strong>\u003C/h2>\u003Cp>Unit-Linked Insurance Plans (ULIP) are among the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/investment-plan\\\" target=\\\"_blank\\\">best investment plans\u003C/a> in India because they provide dual benefits of investment and insurance. When you invest in ULIPs, a portion of your investment is used to provide insurance coverage and the remaining is invested in market-linked securities. These plans are ideal for people with moderate to high-risk appetites.\u003C/p>\u003Cp>\u003Ca href=\\\"https://www.shriramlife.com/life-insurance/golden-jubilee-plan\\\" target=\\\"_blank\\\">Shriram Golden Jubilee Plan\u003C/a> is a unit-linked non-participating plan that provides dual benefits of investment and protection. The top benefits of investing in this plan include flexibility, partial withdrawals, tax benefits, etc. You can also explore \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/wealth-pro\\\" target=\\\"_blank\\\">Shriram Life Wealth Pro\u003C/a>, a unit-linked plan designed to grow wealth and protect your family’s financial future. It provides customized life coverage, greater liquidity, multiple fund options, and more.\u003C/p>\u003Ch2>\u003Cstrong>Senior Citizens Savings Scheme (SCSS)\u003C/strong>\u003C/h2>\u003Cp>SCSS is a government-backed savings scheme designed to provide steady income to retirees and senior citizens. Residents over 60 can invest in SCSS for a block of 5 years and extend it another 3 years later. Senior citizens receive interest income on their contributions, and the government reviews it quarterly. While this plan provides numerous benefits, like a nomination facility, relatively high interest rate, predictable income, etc., premature closing can attract penalties. \u003C/p>\u003Ch2>\u003Cstrong>Savings/Endowment Plans\u003C/strong>\u003C/h2>\u003Cp>Savings and endowment plans are life insurance plans that provide the dual benefits of savings and insurance. Out of all the different types of investments in India, these are suitable for people who want to secure their family’s financial future while saving money to achieve specific financial goals. \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/fortune-builder\\\" target=\\\"_blank\\\">Shriram Life Fortune Builder plan\u003C/a> is an ideal example. It provides long-term life insurance coverage while giving savings benefits.\u003C/p>\u003Cp>It comes with additional protection through riders, unlimited fund switches, flexible settlement options, and more. People focused on building wealth while protecting their family’s financial future must explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/growth-plus\\\" target=\\\"_blank\\\">Life Growth Plus plan\u003C/a>. It provides life cover and savings benefits through market-linked earnings.\u003C/p>\u003Ch2>\u003Cstrong>Retirement Annuity Plans\u003C/strong>\u003C/h2>\u003Cp>Retirement annuity plans are designed to provide a steady, predictable income during your golden years. You invest in these plans in multiple premium payments or a one-time lump sum amount. In return, the insurer provides a fixed income post-retirement for a predetermined period. It is a good retirement investment plan for senior citizens who want financial stability in their non-working years. You can further strengthen your retirement planning by diversifying your investment pool. Explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">protection plans\u003C/a> to find a policy that complements your other investments.\u003C/p>\u003Ch2>\u003Cstrong>Gold\u003C/strong>\u003C/h2>\u003Cp>Out of all the types of investment decisions you make, including gold in your investment portfolio can be the most rewarding. Gold has been used as a hedge against inflation for decades and is often seen as a safe investment asset that doesn’t slump during economic uncertainties. It is also perfect for diversifying your portfolio as it generally moves in the opposite direction of the stock market. Hence, gold prices will rise when stock prices go down, balancing the risk factor in your portfolio. Depending on your investment preferences, you can invest in physical gold, sovereign gold bonds (SGBs), gold mutual funds, or gold exchange-traded funds (ETFs).\u003C/p>\u003Ch2>\u003Cstrong>Risk Level of Investment Options\u003C/strong>\u003C/h2>\u003Cp>All types of investments in India carry a certain level of risk. Common investment options typically have the following risk profiles:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan>\u003Cstrong>Investment\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>\u003Cstrong>Risk Profile\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Stocks\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Bonds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low to moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Real Estate\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Fixed Deposits\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Mutual Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Public Provident Funds (PPF)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>National Pension System (NPS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Unit-Linked Insurance Plan (ULIP)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Senior Citizens Savings Scheme (SCSS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Retirement Annuity Schemes\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Gold\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low to moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Benefits of Investments \u003C/strong>\u003C/h2>\u003Cp>Everyone should start investing early to enjoy its multiple benefits. The top benefits of investing include:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Wealth Creation:\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing in the right options will help you build and grow your wealth. Whether you invest in stocks, mutual funds, real estate, etc., you can expect to build significant wealth through the power of compounding and capital appreciation.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Financial Security\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing in the right securities and plans will safeguard you and your family’s financial future, bringing ease and peace of mind. It will act as a financial cushion during times of emergency. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Beating Inflation\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Market-linked investments have the potential to generate higher returns that can outweigh inflation. It will help you preserve your money’s purchasing power. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Tax Benefits\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Many investment options provide tax benefits on contribution amount and maturity proceeds. Since not every investment has the same tax benefits, always check tax implications specific to your investments. \u003C/p>\u003Ch2>\u003Cstrong>How to Invest?\u003C/strong>\u003C/h2>\u003Cp>The different types of investments in India can easily overwhelm anyone. You can use the following tips to invest in the right financial products or plans:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Set Clear Financial Goals\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Always start by defining your financial goals, as this can help you narrow down potential investment options. For example, retirees wanting a steady income may choose a retirement annuity plan, whereas young individuals wanting to build wealth can explore equity investing.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Understand Your Risk Tolerance\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>All investment options carry a certain degree of risk, so investing is recommended based on your risk tolerance. Fixed deposits, NPS, and PPF, are ideal for people with low-risk profiles, whereas stocks, mutual funds, ULIPs, etc., are recommended for people with moderate to high-risk appetite.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Research Carefully\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>The Indian financial market is vast, so always research about the investments you plan to include in your portfolio. Align it with your risk tolerance to make safer choices. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Diversify Your Portfolio\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Never build your portfolio around a single asset class. A diversified portfolio featuring stocks, annuity plans, fixed deposits, balanced mutual funds, bonds, gold, etc., is a better option because it minimizes risk and balances returns.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Start Early and be Consistent\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing early will give you the benefit of compounding, and being consistent will ensure you continue building wealth while securing your family’s future. \u003C/p>\u003Ch2>\u003Cstrong>Things to Cover While Investing\u003C/strong>\u003C/h2>\u003Cp>To enjoy optimal benefits from investing in India, ensure you remain vigilant in the following areas:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Fraudulent Activities/Platforms\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Be wary of any investment plan or platform that promises unrealistic or guaranteed risk-free, high returns. Avoid investing through unregistered platforms by verifying every platform’s registration details on SEBI’s website. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Factor in Investment Risks\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investments are influenced by various factors, making them risky. Hence, always factor in market fluctuations and focus on building a diversified portfolio that balances risk profile and optimises returns. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Safeguard Your Interests\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>As an investor, you must take proactive steps to secure yourself and your investments. For example, never invest without doing due research or being aware of hidden fees charged by platforms or brokers. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Investing is a must for every individual who wants to achieve financial stability, security, and goals over a period. If you are hesitant to start your investing journey because of the wide range of investment options, consider using this article as the starting point for exploring the top options. You can also check the different retirement, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings\u003C/a>, protection, and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">child plans\u003C/a> at Shriram Life Insurance to build a stable financial future. Each plan is diverse and comes with unique features, so explore the relevant plans and invest accordingly.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"What should I consider when choosing long-term investment options in India\",\"heading\":\"What Should I Consider When Choosing Long-Term Investment Options in India?\",\"short_description\":\"\u003Cp>Long-term investment planning is important for anyone who wants to financially secure their future and achieve financial stability.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2024-12/41.%20What%20should%20I%20consider%20when%20choosing%20long-term%20investment%20options%20in%20India_0.png?VersionId=8pGAAzuTzmvFxymBNLjReLXimW49o15x\",\"alt\":\"Benefits of choosing long term investment options in India\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2024-12-30T10:50:50\",\"updated_on\":\"2024-12-30T10:50:55\",\"read_more_title\":\"Know More\",\"slug\":\"/what-should-i-consider-when-choosing-long-term-investment-options-in-india\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/investments\\\" hreflang=\\\"en\\\">Investments\u003C/a>\",\"description\":\"\u003Cp>Long-term investment planning is important for anyone who wants to financially secure their future and achieve financial stability. These investments deliver returns using the benefit of compounding, where your investments grow over a period. They also help ensure your money grows and retains its purchasing power against the effect of inflation and rising prices and cost of living. Unlike short-term investments, long-term investment options provide greater stability by lowering the impact of market volatility, especially when you stay invested through market cycles.\u003C/p>\u003Cp>While everyone knows the importance of buying long-term investments, many find the wide range of options overwhelming, making it seem challenging to select the right investments. It often prevents them from starting their investment journey at the appropriate time. This blog covers factors to consider while choosing long-term investments so you can identify the right investment options with higher return potential.\u003C/p>\u003Cp>Let us explore the following factors to be considered:\u003C/p>\u003Ch2>\u003Cstrong>Financial Goals\u003C/strong>\u003C/h2>\u003Cp>Defining your financial goals is the foundation for choosing the right long-term investment plan. Decide whether you want to invest for wealth accumulation or save towards children’s higher education expenses. Setting a clear goal and investment objective will help you narrow down choices that perfectly align with your long-term financial goals.\u003C/p>\u003Cp>For example, if your ultimate goal is earning risk-free retirement income, you may choose to invest in National Pension Scheme (NPS) or Public Provident Fund (PPF) over making equity investments. \u003Cbr />People who want to build wealth through market-linked earnings over a period and create a financial cushion for their family can consider investing in our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/golden-jubilee-plan\\\" target=\\\"_blank\\\">Shriram Life Golden Jubilee Plan\u003C/a>. It provides protection and investment benefits in a single plan with various other features like tax benefits, partial withdrawal, easy fund switching, etc\u003C/p>\u003Ch2>\u003Cstrong>Cost of Investment\u003C/strong>\u003C/h2>\u003Cp>It is one of the essential points to consider while choosing long term investments, yet the most overlooked. Investment costs generally include account opening charges, annual maintenance fees, brokerage charges, fund management expenses, etc. High investment costs can erode returns over time if you’re investing in long-term options.\u003C/p>\u003Cp>For example, some mutual funds may have a higher expense ratio than others, resulting in lower returns for investors. So, always calculate your cost of investment and compare similar investment options. This will help you easily identify the best investment options in India for the long term where return on investment (ROI) is attractive.\u003C/p>\u003Ch2>\u003Cstrong>Return on Investment (ROI)\u003C/strong>\u003C/h2>\u003Cp>Everyone prefers investing in high ROI options because they measure the profitability of an investment. Since you’re making long-term investments, focus on earning consistent, inflation-beating returns rather than short-term gains.\u003C/p>\u003Cp>Always compare historical performance if you’re investing in stocks, fixed deposits, mutual funds, or any other long-term investment options. If your primary investment focus is good returns, then high-ROI options like equities may be considered. Traditional plans like PPF provide slightly lower returns but are typically more stable than equities.\u003C/p>\u003Ch2>\u003Cstrong>Liquidity\u003C/strong>\u003C/h2>\u003Cp>Since many people choose long-term investment options for growth, liquidity doesn’t matter to them. However, buying investments with some flexibility is encouraged to counter unexpected financial challenges. For example, if you have PPF investments, you can use its partial withdrawal facility to cover unexpected medical expenses.\u003C/p>\u003Cp>The same may not be possible with Fixed Deposits (FDs) because they may charge penalties for early withdrawal, lowering your funds. Hence, always evaluate the liquidity provisions to pick suitable options.\u003C/p>\u003Ch2>\u003Cstrong>Tax Implication\u003C/strong>\u003C/h2>\u003Cp>The correct investment options typically provide various tax benefits. It can help you reduce your taxes while increasing your earnings. For example, when you invest in options like ELSS mutual funds, PPF, and NPS, you can claim deductions for the contribution amount u/s 80 C while filing the income tax return.\u003Cbr />Certain investment options like ULIPs provide tax-free returns u/s Sec 10(10D) if your premium payments are less than 10% of the policy’s sum assured value. Pick your investments strategically to lower your tax liability and maximize tax-free returns.\u003C/p>\u003Ch2>\u003Cstrong>Risk Tolerance\u003C/strong>\u003C/h2>\u003Cp>You should always invest in options whose risk level aligns with your risk tolerance. Conservative investors who want risk-free returns should explore low-risk options like fixed deposits, annuity plans, or any guaranteed return plans. You can also check our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings plans\u003C/a> to find low-risk options.\u003Cbr />If you have a moderate to high-risk appetite, you can explore high-risk options like ULIPs, EFTs, equity mutual funds, etc. Our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/fortune-builder\\\" target=\\\"_blank\\\">Shriram Life Fortune Builder Plan\u003C/a> is ideal for people with moderate to high-risk profiles. It is a single-premium life insurance plan that provides protection and savings benefits in a single plan. \u003C/p>\u003Cp>Individuals with moderate risk profiles should create a diversified investment portfolio comprising low, medium, and high-risk investments to balance steady growth and high earning potential. All goal-based investments must be made after assessing your risk tolerance. \u003C/p>\u003Ch2>\u003Cstrong>Investment Terms\u003C/strong>\u003C/h2>\u003Cp>It is one of the most crucial factors to consider while choosing long-term investments because it dictates the lock-in periods, exit options, penalties for early withdrawals, cost of investment, and all other investment-related conditions. Not all investment products are designed the same, so always look for options that align with your financial goals, lifestyle, and obligations.\u003C/p>\u003Cp>For example, you may invest in Equity Linked Savings Scheme (ELSS) funds over Public Provident Fund (PPF) because the former has a shorter lock-in period than PPF. It can be beneficial for individuals with kids to meet unexpected education expenses in the short term. Understanding investment terms will help you finalize options that align with your liquidity needs without unwanted constraints.\u003C/p>\u003Ch2>\u003Cstrong>Regulatory and Market Factors\u003C/strong>\u003C/h2>\u003Cp>All investments are governed by specific regulations and market conditions. For example, schemes like National Pension Scheme (NPS) and Public Provident Fund (PPF) are government-backed and strictly regulated, due to which they’re considered relatively secure long-term investment options. \u003C/p>\u003Cp>On the other hand, market-linked investment options such as stocks are affected by economic trends, making them risky for conservative investors. If you want to buy the most rewarding and best investment options in India for the long term, evaluate the governing and regulatory factors before committing. A regulated, transparent plan will minimize risk and ensure accountability, so choose wisely. \u003C/p>\u003Ch2>\u003Cstrong>Types of Investment Options\u003C/strong>\u003C/h2>\u003Cp>Since everyone invests to either grow their income, create safe income streams post-retirement, or build wealth over a period, most investment plans can be categorized into the following three options:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Growth\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Safe\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Income\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">These are generally long-term investment options with a longer lock-in period. They are volatile and don’t allow premature withdrawals.\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">As the name suggests, these options keep the investment safe and help you achieve mid-term financial goals. They generally don’t allow withdrawals in the first few years of investment.\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">It is the best low-risk investment option to convert a lump sum payment into monthly/quarterly/annual income. \u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">ULIPs\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Sovereign Gold Bonds (SGBs)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Infrastructure bonds\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Mutual funds\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Equity stocks\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">PPF\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">NPS\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Equity-linked Saving Scheme(ELSS)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Real Estate Investment Trusts (REITs)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Exchange Traded Funds (EFTs)\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003Ctd>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Fixed deposits\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Guaranteed savings plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Recurring deposits\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Treasury bills\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Corporate fixed deposits (from top-rated companies)\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003Ctd>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Pension plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Immediate annuity plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Post Office Senior Citizens Welfare Fund \u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Dividend-paying stocks\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Non-convertible debenture\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Debt mutual funds\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Risk Level of Top Investment Options in India\u003C/strong>\u003C/h2>\u003Cp>The following information can be beneficial if you want to choose the best investment options in India for long term based on your risk profile:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Level of Risk Involved\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Investment Option\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Description of the Investment Option\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">ULIPs\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Combines investment in market-linked funds with life insurance coverage\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Bank fixed deposits\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Investments are locked for a fixed tenure, providing assured returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Pension plans\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Long-term investment plans designed to provide regular income post-retirement.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Equity Mutual Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Funds invested primarily in stocks for higher growth potential.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Hedge Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Actively managed fund that uses pooled investment to maximize returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Corporate bonds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Debt securities issued by companies to raise capital, providing fixed interest payment.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Annuity plans\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Financial product providing regular pay-outs, typically after retirement.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Index funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Mutual funds that replicate the performance of a specific stock market index.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Balanced mutual funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Funds investing in both equities and debt instruments for balanced risk and returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Senior Citizen Savings Scheme (SCSS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">A government-backed scheme providing assured returns to senior citizens.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Post Office Monthly Income Scheme (POMIS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Investment plan providing fixed monthly income through post offices.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Initial Public Offering (IPO)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Process of raising capital by companies for the first time in exchange of shares. \u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Debt mutual funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Funds that invest primarily in fixed-income securities, like bonds and treasury bills.\u003C/span>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Making strategic long-term investments is a great way to systematically build wealth over a period. Whether you want to create a large retirement fund, build your dream house after a few years, make provisions for your children’s higher educational costs or marriage, etc., you can achieve all your goals by choosing the best investment options in India for the long term.\u003C/p>\u003Cp>You can use the factors discussed in this article to choose the right investment options that align with your financial goals. For instance, check our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/growth-plus\\\" target=\\\"_blank\\\">Shriram Life Growth Plus Plan\u003C/a> if you want life cover and savings benefit in a single policy. Those looking to build wealth over time and secure their family’s financial future can consider our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/wealth-pro\\\" target=\\\"_blank\\\">Shriram Life Wealth Pro Plan\u003C/a>. You can also explore the various \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">Child Plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">Protection Plans\u003C/a> at Shriram Life Insurance to diversify your long-term investment portfolio for maximum benefits.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"Why Millennials love Super Income Plan\",\"heading\":\"Why Millennials love Super Income Plan\",\"short_description\":\"\u003Cp>In an era marked by economic uncertainty and evolving financial landscapes, millennials are increasingly prioritizing financial stability and plann\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2024-12/10.%20Why%20Millennials%20love%20Super%20Income%20Plan_0.png?VersionId=D_0cCoUxuCHeach1Ds_9hd6cJL9Xqdz2\",\"alt\":\"Why Millennials love Super Income plan?\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2024-12-26T17:31:40\",\"updated_on\":\"2024-12-26T17:32:03\",\"read_more_title\":\"Know More\",\"slug\":\"/why-millennials-love-super-income-plan\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/retirement\\\" hreflang=\\\"en\\\">Retirement\u003C/a>, \u003Ca href=\\\"/blog/guides/savings\\\" hreflang=\\\"en\\\">Savings\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>\",\"description\":\"\u003Cp>In an era marked by economic uncertainty and evolving financial landscapes, millennials are increasingly prioritizing financial stability and planning for the future. Among the array of financial products available, Super Income Plans have emerged as a compelling option for this generation of savers who are seeking to secure their savings and plan for retirement effectively. This blog explores why millennials are gravitating towards Super Income Plans, highlighting their benefits and relevance in today's financial climate.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Shriram Life Super Income Plan: A Secure Path to Savings and Retirement\u003C/strong>\u003C/h2>\u003Cp>Super Income Plans such as the Shriram Life Super Income Plan are structured \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement savings insurance plans\u003C/a> designed to provide policyholders with a guaranteed income stream during their retirement years. Unlike traditional savings accounts or investments, which may be subject to market fluctuations, these plans offer stability and predictability in income, making them particularly attractive to millennials who value financial security.\u003C/p>\u003Ch2>\u003Cstrong>Why Millennials Choose Super Income Plans\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>1. Guarantee of Income in Retirement\u003C/strong>\u003C/h3>\u003Cp>Millennials, known for their cautious approach to financial planning, appreciate the certainty offered by Super Income Plans. These plans ensure a regular income stream, either for a fixed term or throughout their lifetime, thereby mitigating the risk of outliving savings. This feature aligns well with millennials' desire for stability amidst economic uncertainties, providing peace of mind that their retirement income is secured regardless of market conditions.\u003C/p>\u003Ch3>\u003Cstrong>2. Long-Term Financial Planning Made Simple\u003C/strong>\u003C/h3>\u003Cp>Planning for retirement can seem daunting, especially for millennials facing competing financial priorities such as student loans, housing costs, and career advancement. Super Income Plans simplify long-term financial planning by offering a structured approach to savings. Millennials can contribute regularly to these plans during their working years, knowing that they are building a reliable source of income for their retirement. This disciplined saving habit resonates with millennials' preference for financial strategies that are straightforward and goal-oriented.\u003C/p>\u003Ch3>\u003Cstrong>3. Customization Options to Fit Individual Needs\u003C/strong>\u003C/h3>\u003Cp>Flexibility is a key selling point of Super Income Plans that appeals to millennials. These plans allow policyholders to customize various parameters, such as the payout frequency and duration, based on their specific financial goals and lifestyle preferences. For millennials balancing diverse financial goals, such as travel aspirations and family planning, the ability to tailor their Super Income Plan ensures that their retirement strategy remains adaptable and aligned with evolving life stages.\u003C/p>\u003Ch3>\u003Cstrong>4. Integration of Insurance Benefits\u003C/strong>\u003C/h3>\u003Cp>Super Income Plans such as the Shriram Life Super Income Plan include savings insurance plans benefits that provide additional layers of financial protection. These may include provisions for disability coverage or death benefits, ensuring that policyholders and their loved ones are safeguarded against unexpected life events. Millennials, recognizing the importance of comprehensive financial planning, value the peace of mind that comes from knowing their Super Income Plan not only secures their retirement but also protects their financial well-being throughout their lives.\u003C/p>\u003Ch3>\u003Cstrong>5. Legacy Planning and Future Security\u003C/strong>\u003C/h3>\u003Cp>While millennials are focused on their own financial futures, they also prioritize leaving a legacy for their loved ones. Super Income Plans support legacy planning by allowing policyholders to designate beneficiaries who will receive the remaining payouts or accumulated funds upon their demise. This aspect of the plan ensures that millennials can pass on financial security to future generations, reinforcing their commitment to long-term financial responsibility and family welfare.\u003C/p>\u003Ch3>\u003Cstrong>6. Diversification of Retirement Assets\u003C/strong>\u003C/h3>\u003Cp>Millennials understand the importance of diversifying their investment portfolio to mitigate risk. Super Income Plans offer a diversified approach to retirement savings by providing a stable income stream alongside traditional investments like stocks and bonds. This diversification strategy appeals to millennials seeking to balance risk and reward while building a resilient retirement fund.\u003C/p>\u003Ch3>\u003Cstrong>7. Inflation Protection\u003C/strong>\u003C/h3>\u003Cp>Many Super Income Plans include provisions for inflation protection, ensuring that the purchasing power of retirement income remains intact over time. Millennials, who are keenly aware of the impact of inflation on their finances, appreciate this feature as it helps maintain the value of their income amidst rising living costs.\u003C/p>\u003Ch3>\u003Cstrong>8. Tax Efficiency\u003C/strong>\u003C/h3>\u003Cp>Super Income Plans often provide tax advantages, such as tax-deferred growth on contributions and potential tax-exempt payouts under certain conditions. Millennials, who are proactive about optimizing their tax liabilities, recognize the benefits of these tax-efficient savings vehicles in enhancing overall retirement readiness.\u003C/p>\u003Cp>By addressing these additional points, millennials can gain a comprehensive understanding of how Super Income Plans such as the Shriram Life Super Income Plan align with their financial goals and aspirations for a secure retirement.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion: \u003C/strong>\u003C/h2>\u003Ch2>\u003Cstrong>Super Income Plans for Millennial Financial Confidence\u003C/strong>\u003C/h2>\u003Cp>In conclusion, Super Income Plans represent more than just a retirement savings tool for millennials- they embody a strategic approach to financial security and future planning. By offering guaranteed income, customization options, and integrated \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings insurance plans\u003C/a> benefits, these plans empower millennials to build a robust financial foundation while preparing for retirement with confidence.\u003C/p>\u003Cp>Whether you're a millennial navigating the complexities of financial planning or an individual looking to secure your retirement, exploring the benefits of Super Income Plans can provide clarity and assurance in achieving your financial goals. Embrace the certainty and flexibility of Super Income Plans today to pave the way for a financially secure tomorrow.\u003C/p>\u003Cp>Understanding the nuances of Super Income Plans and how they align with millennials' financial aspirations underscores their relevance in today's dynamic economic landscape. By harnessing the benefits of these plans, millennials can forge a path towards financial independence and retirement readiness, ensuring a future filled with stability, security, and prosperity.\u003Cbr /> \u003C/p>\",\"category\":\"/blog/super-income-plan\"}],\"blog_count\":[{\"count\":133,\"counts\":133}],\"nothing\":\"all\",\"nothing_1\":317}]","http://127.0.0.1:4000/api/v1/tagged-blogs/317/all":"[{\"category\":[{\"id\":1781,\"name\":\"Super Income Plan\"},{\"id\":1782,\"name\":\"Advice\"},{\"id\":1930,\"name\":\"Child Plan\"},{\"id\":1979,\"name\":\"Early Cash Plan\"},{\"id\":1982,\"name\":\"Assured Income Plan\"},{\"id\":1984,\"name\":\"Golden Premier Saver Plan\"},{\"id\":1985,\"name\":\"Premier Assured Benefit\"}],\"blogs\":[{\"title\":\"Key Differences of Policy Term and Premium Paying Term\",\"heading\":\"Key Differences of Policy Term and Premium Paying Term\",\"short_description\":\"\u003Cp>When it comes to financial planning, it is important to be prudent and well-informed.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/10.%20Clarifying%20Policy%20Term%20and%20Premium%20Paying%20Term_0.webp?VersionId=8PsDtHY8xGLnr1dtpAt4XNa.aB.pfMEf\",\"alt\":\"Policy Term vs Premium Paying Term\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-21T05:54:26\",\"updated_on\":\"2025-01-21T05:54:31\",\"read_more_title\":\"Know More\",\"slug\":\"/key-differences-of-policy-term-and-premium-paying-term\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>\",\"description\":\"\u003Cp>When it comes to financial planning, it is important to be prudent and well-informed. Understanding how a Life Insurance Policy works is a key part of this. When you know the options available and how each of those options works, you can make well-informed decisions to achieve a personalized financial protection plan.\u003C/p>\u003Cp>Two important concepts in the life insurance domain are - the policy term and premium paying term. Let us examine each in detail. Understanding what each of these means will aid in one’s understanding of how insurance policies work. \u003C/p>\u003Cp>Both the policy term and premium paying term, though reads similar, refer to two distinct components of a life insurance policy each carrying significant implications for both the policyholder and their beneficiaries.\u003C/p>\u003Cp>In this blog, we will explore these terms in-depth, examining their fundamental differences, key factors to consider when making decisions about them, and scenarios in which they are particularly applicable to various financial situations. This comprehensive analysis aims to equip you with the knowledge necessary to plan your life insurance plans effectively.\u003C/p>\u003Ch2>\u003Cstrong>What Is A Policy Term?\u003C/strong>\u003C/h2>\u003Cp>A policy term refers to the duration of the policy that is covered under the insurance policy. A insurance policy of 40 years will have a policy term extending to 40 years during which time, the insured’s family members will receive the compensation of the policy in case of an unfortunate event in the insured’s life.\u003C/p>\u003Ch2>\u003Cstrong>What is a Premium Paying Term (PPT)?\u003C/strong>\u003C/h2>\u003Cp>Premium paying term refers to the period in your insurance policy in which you pay premiums to maintain your insurance coverage. Example, if a insurance policy extends to 40 years of which, the insured is expected to pay premiums until 20 years, then the premium paying term for that particular policy will be 20 years.\u003C/p>\u003Ch3>\u003Cstrong>Differences Between Policy Term and Premium Paying Term\u003C/strong>\u003C/h3>\u003Cp>Understanding the difference between policy term and premium paying term can help you make informed decisions when choosing a Life Insurance Policy that aligns with your specific needs and financial goals. A few of the most important differences are put together below:\u003C/p>\u003Ch3>\u003Cstrong>Examples\u003C/strong>\u003C/h3>\u003Ch3>\u003Cstrong>Duration of Coverage:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term-\u003C/strong> If you choose a 20-year policy term, then your dependents will be covered for that period of 20 years. If the unfortunate demise of the policyholder or life insured occurs within such a period, then the will beneficiaries receive the agreed-upon death benefit.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term- \u003C/strong>However, if your premium paying term is 10 years, you will pay premiums for only 10 years, but your coverage will continue for the full 20 years. After the premium paying term is completed, the plan continues with the coverage and benefits and no further premiums need to be paid by the policyholder.\u003C/p>\u003Cp>In such an instance, risk coverage provided by the insurer is typically paid for from within the accumulated funds within the plan.\u003C/p>\u003Ch3>\u003Cstrong>Financial Implications:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term-\u003C/strong> A 30-year policy term ensures that your family will receive the death benefit for three decades. This extended coverage is particularly beneficial during critical life stages, such as raising children or paying off a mortgage, when financial obligations are at their peak.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term- \u003C/strong>The premium paying term specifies the period during which you are required to make premium payments. A shorter premium paying term, such as a 15-year premium paying term, can significantly ease your current financial burden. If you are considering accumulation of funds or savings alongside the insurance protection, some plans where your premium amount is deployed in market linked investments, paying more years would obviously enhance the amount of corpus at the end of the policy term.\u003C/p>\u003Ch3>\u003Cstrong>Flexibility:\u003C/strong>\u003C/h3>\u003Cp>\u003Cstrong>Policy Term- \u003C/strong>If you choose a 20-year policy term, your dependents will be covered for the entire 20 years. Should you pass away within this period, your beneficiaries will receive the agreed-upon death benefit, providing them with financial security during a crucial time.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term-\u003C/strong> However, if your premium paying term is 10 years, you will pay premiums for only 10 years, while your coverage continues for the full 20 years. After the premium paying term ends, you won’t need to make any further payments, yet your beneficiaries will remain protected until the policy term expires, ensuring peace of mind without ongoing financial commitments.\u003C/p>\u003Cp>The other significant difference is the flexibility offered in each term. While many policies provide flexible premium paying terms, once a policy term is selected, it is usually fixed.\u003C/p>\u003Ch2>\u003Cstrong>Factors to Consider in Selecting Policy Term and Premium Paying Term\u003C/strong>\u003C/h2>\u003Cp>It is based on several considerations compatible with your current financial situation as well as future objectives. Among them, the following are a few important ones:\u003C/p>\u003Ch3>\u003Cstrong>Policy Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>\u003Cstrong>Financial Goals:\u003C/strong> What are you looking to achieve with your life insurance? Are you looking to provide financial assistance for your family in the event of an untimely death, or do you want to accumulate cash value for future use?\u003C/li>\u003Cli>\u003Cstrong>Age:\u003C/strong> In this again, age is a very important determinant of the term by which one should have a policy. Younger policyholders will benefit from long periods that cost them less, whereas older persons are most likely to opt for shorter terms based on their remaining life and obligations against them. This is not mandatory guideline but indicates usual patterns across different age groups of policy holders.\u003C/li>\u003Cli>\u003Cstrong>Family Needs:\u003C/strong> If you have dependents, you must choose a policy term that will be able to provide enough cover until they are independent and financially sound. A longer term will assure you peace of mind in these important years.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>Premium Paying Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>\u003Cstrong>Affordability:\u003C/strong> It is very important to choose a premium paying term that would fall within your capacity to pay.\u003C/li>\u003Cli>\u003Cstrong>Investment Strategy: \u003C/strong>If the purpose of purchasing a life insurance policy is for investment, then one should consider how the premium paying term fits into your overall investment strategy. Longer premium paying terms may allow growth in some types of policies.\u003C/li>\u003Cli>\u003Cstrong>Flexibility:\u003C/strong> Check if policies have flexible terms for premium payments. This flexibility may prove to be priceless when you think you might undergo a change in your financial circumstance that will affect your ability to pay premiums.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>Common Scenarios\u003C/strong>\u003C/h3>\u003Ch4>Scenario 1: Young Policyholder with Limited Pay Plan\u003C/h4>\u003Cp>Let's take the case of Radha, an individual who is in her early thirties. She chooses a 20-year policy term for her life insurance policy which means her coverage will extend until her early fifties. She further opts to pay her premiums for a 10-year premium paying term. That is precisely what she needs:\u003C/p>\u003Cp>\u003Cstrong>Duration of Insurance Coverage:\u003C/strong> Radha wants to ensure that her family, namely her children will get a financial benefit in case of her demise. This protection for 20 years is because by that time, they will likely be independent adults themselves and until that time, they will have the 20 years of protection through death benefit.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term: \u003C/strong>For 10 years, she pays premiums during her known productive working years and will cease to do so around the time her expenses for her children’s education or life goals may be higher. are inexpensive at this stage in crucial child-rearing years. It means that after this 10 year period, she will no longer pay the premium anymore, but her life is covered under life insurance until age 50 and her dependents will receive the death benefit payout until that time, in case of her death.\u003C/p>\u003Cp>As you can see from the above example, the planning for the policy period and the premium payment term must be based on a proper understanding of one’s needs and in alignment with one’s life journey.\u003C/p>\u003Ch4>Scenario 2: Older Age Client with Long-Term Needs\u003C/h4>\u003Cp>Here’s another scenario of Murali, now at the age of 40, with a more permanent source of income and seeking insurance coverage that will provide him with more than enough when he is at an old age. Here the goals are dual - one part is financial protection from the risk of death during one’s productive years. The second part is to accumulate savings to support one’s living beyond the retirement age by using the savings aspect of a suitable life insurance plan. Murali therefore chooses a 30-year policy term coupled with a 30-year premium paying term. This is how it works for him:\u003C/p>\u003Cp>\u003Cstrong>Duration of Insurance Coverage:\u003C/strong> Murali wants long-term coverage for his family, especially as retirement age is approaching and the children are still financially dependent and his spouse depends on his income.\u003C/p>\u003Cp>\u003Cstrong>Premium Paying Term: \u003C/strong>Murali is committing to predictable premium payments extending over a 30 year span. It fits in well with his monthly budget and financial planning. Once this phase is over, he will have accumulated a good amount while having enjoyed the coverage. This way when he reaches retirement age and his income may drop he will have some funds to rely on.\u003C/p>\u003Cp>In this way, Murali is able to plan for his family’s finances in the event of his death during his working years and also parallelly save towards his retirement years.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Understanding the distinction between the policy term and the premium paying term equips you with the knowledge necessary to make informed choices. Additionally, this understanding allows you to recognize the flexibility some plans provide, enabling you to tailor them to your specific needs. We hope this insight helps simplify your decision-making process concerning coverage, financial commitments, and your overall financial strategy.\u003C/p>\u003Cp>\u003Ca href=\\\"https://www.shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a> provides wide range plans, including \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">Retirement Plans\u003C/a>, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">Savings Plans\u003C/a>, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">Child Plans\u003C/a>, and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">Protection Plans\u003C/a>, designed to meet your financial needs.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"The Impact of Lifestyle Choices on Life Insurance Premiums\",\"heading\":\"The Impact of Lifestyle Choices on Life Insurance Premiums\",\"short_description\":\"\u003Cp>Investing in life Insurance policies is one of the best decisions you can make to secure your family’s financial future.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/3.%20The%20Impact%20of%20Lifestyle%20Choices%20on%20Life%20Insurance%20Premiums%20copy_2.webp?VersionId=xR3yulN0Rjs867cuG5tZkrdUG2t7aUcy\",\"alt\":\"Lifestyle choices Impact on life insurance Premiums\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-20T05:36:04\",\"updated_on\":\"2025-01-20T05:36:08\",\"read_more_title\":\"Know More\",\"slug\":\"/impact-of-lifestyle-choices-on-life-insurance-premiums\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>\",\"description\":\"\u003Cp>Investing in life Insurance policies is one of the best decisions you can make to secure your family’s financial future. It will create a financial safety net for your loved ones in exchange for predetermined premium payments. While all life insurance plans are designed for the same purpose, different policyholders pay different premiums to receive similar benefits or even the same life insurance coverage. Why does this happen?\u003C/p>\u003Cp>This difference in premium rates is because of the policyholder’s age, health, and likely also lifestyle, habits, and pre-existing health conditions or risks. It can be surprising to most, but what you eat, how you live, the risks you take, and other lifestyle choices have some bearing or influence on your insurance premiums. This blog highlights major lifestyle factors affecting life insurance premiums.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Life Insurance Premiums\u003C/strong>\u003C/h2>\u003Cp>A life insurance premium is a predetermined one-time or consistent payment a policyholder makes to maintain the validity of a life insurance policy. Paying timely premiums ensures your family receives the policy benefits in the unfortunate event of your death.\u003C/p>\u003Cp>The premium concept appears straightforward, but insurers assess multiple factors to determine policy premiums for different individuals. While there are numerous factors affecting life insurance premiums, the following are the most prominent.\u003C/p>\u003Ch3>\u003Cstrong>Age\u003C/strong> \u003C/h3>\u003Cp>Older adults and seniors generally pay higher premiums than young individuals because the risk of death increases with age. Insurance providers levy higher premiums to cover this increased risk. Hence, life insurance planning should start at a young age.\u003C/p>\u003Ch3>\u003Cstrong>Gender\u003C/strong>\u003C/h3>\u003Cp>Insurance companies use statistical models to estimate how long an individual with a specific profile will live, influencing the premium rates. Since Indian female’s average life expectancy surpasses that of Indian males by 2.5%, women pay lower premiums than men.\u003C/p>\u003Ch3>\u003Cstrong>Lifestyle Choices\u003C/strong>\u003C/h3>\u003Cp>You may be subject to higher risk if you work in risky occupations like mining, construction, etc., or frequently engage in adventurous activities like scuba diving, paragliding, etc. If people with this risk profile buy \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">protection plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">child plans\u003C/a>, they’ll naturally pay higher premiums than those with a safer occupation and less adventurous lifestyle. For greater understanding, we have covered the major lifestyle choices that impact insurance premiums in a later section. \u003C/p>\u003Ch3>\u003Cstrong>Family Medical History\u003C/strong>\u003C/h3>\u003Cp>Family medical history gives insight into hereditary diseases or health conditions that may influence the policyholder’s life expectancy. You’ll be charged higher premiums if your family has a medical history of critical illness or diseases like diabetes, cancer, heart disease, etc. You can explore \u003Ca href=\\\"https://www.shriramlife.com/contact-us/faq\\\" target=\\\"_blank\\\">life insurance FAQs\u003C/a> to gain more insights about the critical illnesses or diseases affecting insurance premiums.\u003C/p>\u003Ch3>\u003Cstrong>Pre-Existing Conditions\u003C/strong>\u003C/h3>\u003Cp>All insurance companies count pre-existing conditions as among the factors for evaluating risk. This further varies on the type of pre-existing health conditions, their severity, and their impact on the proposed policyholder’s health. People with critical pre-existing conditions pay higher premiums than those with no pre-existing conditions. If you’re investing in the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a> to protect your family against financial uncertainties in case of your death, you may have to pay higher premiums if diagnosed with pre-existing conditions and vice-versa.\u003C/p>\u003Ch3>\u003Cstrong>Sum Assured\u003C/strong>\u003C/h3>\u003Cp>Higher sum assured leads to higher premium rates and vice-versa. You can use a reliable life insurance premium calculator to get near-accurate premium estimates based on the policy’s sum assured and other factors.\u003C/p>\u003Ch3>\u003Cstrong>Policy Term\u003C/strong>\u003C/h3>\u003Cp>The longer the insurance policy term, the higher the premium is. Extended policy terms increase the chance of insurance companies having to pay a claim, resulting in higher premiums. You can use our online life insurance premium calculator to get near-accurate premium estimates.\u003C/p>\u003Ch2>\u003Cstrong>Lifestyle Factors Affecting Premiums\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Health and Medical History\u003C/strong>\u003C/h3>\u003Cp>Your medical history and overall health, including existing health status, pre-existing health conditions, etc., significantly impact your premium rate. For example, insurers consider people with a family history of serious health diseases or pre-existing conditions signaling diabetes, hypertension, obesity, etc., risky. \u003Cbr />Some insurers may request a medical examination or detailed health records to assess an individual’s risk profile. The higher the individual’s risk profile, the higher the premiums are and vice-versa. You must follow health and wellness tips to improve your overall health, leading to lower insurance premiums.\u003C/p>\u003Ch3>\u003Cstrong>Smoking and Substance Use\u003C/strong>\u003C/h3>\u003Cp>Smoking and substance usage puts you at a higher risk of developing serious health challenges. Hence, insurance companies levy higher premiums on smokers and substance users compared to non-smokers. You can be classified as a smoker even if you smoke occasionally.\u003C/p>\u003Cp>Avoid lying to the insurer about your smoking habits because misleading with wrong information can get your policy cancelled and claims rejected. You can use our \u003Ca href=\\\"https://www.shriramlife.com/smoking-calculator\\\" target=\\\"_blank\\\">smoking calculator\u003C/a> to assess the financial cost of your smoking habit. This information can help you realize the extent of financial damages, giving you strong reasons to curb your smoking habit. \u003C/p>\u003Ch3>\u003Cstrong>Occupation and Hobbies\u003C/strong>\u003C/h3>\u003Cp>People working in occupations exposed to greater risk are charged higher premiums than people employed in safer professions/industries. For example, people working in industries like mining, oil, gas, construction, adventure sports, etc., are more exposed to risky environments that may result in death. Hence, their premiums charged on all \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings plans\u003C/a> are always higher than those charged to professionals with desk jobs. A similar rule applies to people with adventurous hobbies.\u003C/p>\u003Ch3>\u003Cstrong>Diet and Exercise\u003C/strong>\u003C/h3>\u003Cp>What you eat and how you treat your body is a significant lifestyle factor influencing your insurance premium. People leading a healthy lifestyle fueled by healthy eating, regular exercise, etc., are at a lower risk of developing health challenges. It translates to comparatively lower premiums.\u003C/p>\u003Cp>However, people with a sedentary lifestyle and unhealthy eating habits are subjected to higher premiums. If you want to improve the quality of your life, start following a healthy diet and regular exercise. Pair it with making the right investments in products like \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Shriram Life Assured Income Plan\u003C/a> to improve your family’s financial life during challenging times, when you’re not around.\u003C/p>\u003Ch2>\u003Cstrong>Steps to Lower Life Insurance Premiums\u003C/strong>\u003C/h2>\u003Cp>If you want to get lower life insurance premiums, you must work on improving your overall health and lifestyle. For example, if you’re a smoker, then make an effort to quit smoking. People with sedentary lifestyles must follow regular exercise routines and healthy eating habits to improve their health, attracting lower premiums.\u003C/p>\u003Cp>You can reduce your participation in risky activities and take consistent steps to lower your stress levels. Making these changes a part of your daily life will bring massive improvements in your health condition. It may give you further financial incentives by helping you save by bringing your premium to a normal risk level premium.\u003C/p>\u003Cp>Use this opportunity to get the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/wealth-pro\\\" target=\\\"_blank\\\">Shriram Life Wealth Pro plan\u003C/a> at a comparatively lower premium. This unit-linked plan can help you grow your investment while creating a financial safety net for your family in the unfortunate event that you’re not being around to provide for them. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Every decision we make regarding our eating habits, activity selection, etc., influences our lives in various ways. They affect our health, quality of life, and insurance premium rates. So, if you’re planning to secure your family under generous life insurance coverage, ensure you maintain a healthy lifestyle to attract lower insurance premiums. You can make healthy lifestyle adjustments by factoring in the points discussed above to enjoy the dual benefits of excellent health and lower premiums.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"How Life Insurance Can Support Long-Term Financial Goals\",\"heading\":\"How Life Insurance Can Support Long-Term Financial Goals?\",\"short_description\":\"\u003Cp>A term that helps us to save towards our life goals and manage life’s unexpected challenges along the way.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/26.%20India%27s%20Tax%20Structure_%20A%20Closer%20Look%20at%20Different%20Taxes_0.png?VersionId=BcD3jvV.kwwhYyi5L.foJWVYfHA5kyOR\",\"alt\":\"Life insurance- a part of long term financial goals\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-08T11:28:38\",\"updated_on\":\"2025-01-08T11:28:43\",\"read_more_title\":\"Know More\",\"slug\":\"/how-life-insurance-can-support-long-term-financial-goals\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>\",\"description\":\"\u003Cp>A term that helps us to save towards our life goals and manage life’s unexpected challenges along the way.\u003C/p>\u003Cp>When it comes to saving money, people generally fall into two categories: irregular and regular savers. Irregular savers save money whenever possible, thinking little about their retirement plans and future. However, regular savers are diligent people who invest their money in multiple ways, carefully planning to meet their financial goals and choosing investments to suit them.\u003C/p>\u003Cp>If you fall into the first category, you are not alone. The Economic Times reports that around 69% of Indian households struggle with financial insecurity. Likewise, a recent Reserve Bank of India survey highlights a sharp decline in India's net household savings, which dropped from 7.3% to 5.3% of GDP. Therefore, financial planning becomes very important in situations like these. Life Insurance is essential in long-term financial strategies, providing financial security for dependents in case of any unforeseen event. It also serves as a wealth-building tool and provides tax benefits, ensuring financial stability for the future. So, in this article, we shall learn why a Life Insurance policy is an important part of your long-term financial goals and how you can choose the one that fits your needs.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Life Insurance is a contract between an individual and an insurance company. In exchange for regular premium payments, the insurer guarantees a death benefit to the designated beneficiaries. The premiums vary depending on the policy type, the coverage amount, and the policyholder's age and health. The basic concept is to provide financial protection to the policyholder’s family or dependents in case of an untimely death, ensuring their financial security. \u003C/p>\u003Ch2>\u003Cstrong>Types of Life Insurance Policies\u003C/strong>\u003C/h2>\u003Cp>There are several types of Life Insurance policies available in India, each designed to meet different financial needs and goals. \u003C/p>\u003Ch2>\u003Cstrong>Term Insurance\u003C/strong>\u003C/h2>\u003Cp>Term Insurance is one of India's most affordable and widely chosen types of Life Insurance. It provides coverage for a specific period, such as 10, 20, or 30 years, and pays a death benefit if the insured passes away during the term. Term Insurance provides life cover without any maturity benefit, making it a cost-effective option. Shriram Life Insurance provides affordable Term Insurance plans such as \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/online-term-plan\\\" target=\\\"_blank\\\">Online Term plan \u003C/a>that provide high sum assured at competitive premiums.\u003C/p>\u003Ch2>\u003Cstrong>Whole Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Whole Life Insurance provides coverage for the entire lifetime. It includes a guaranteed death benefit and a cash value component that grows over time. Whole Life Insurance tends to have higher premiums than Term Insurance due to lifelong coverage and cash value accumulation. \u003Ca href=\\\"https://www.shriramlife.com/blog/advice/what-is-a-whole-life-insurance-policy-things-to-consider\\\" target=\\\"_blank\\\">Shriram Life's Whole Life Insurance plans\u003C/a> provide lifetime coverage and the added benefit of building cash value over time, making them a solid option for long-term financial security.\u003C/p>\u003Ch2>\u003Cstrong>Unit Linked Insurance Plans (ULIPs)\u003C/strong>\u003C/h2>\u003Cp>\u003Ca href=\\\"https://www.shriramlife.com/life-insurance/investment-plan\\\" target=\\\"_blank\\\">Unit Linked Insurance Plans (ULIPs)\u003C/a> combine Life Insurance with investment opportunities. A portion of the premium goes toward life coverage. At the same time, the remainder is invested in various funds, such as equity, debt, or hybrid funds, allowing the policyholder to potentially earn market-linked returns. ULIPs allow switching between funds based on your risk appetite and market conditions. Shriram Life provides a handy ULIP calculator, which helps you estimate return and maturity value.\u003C/p>\u003Ch2>\u003Cstrong>Endowment Plans\u003C/strong>\u003C/h2>\u003Cp>Endowment Plans such as New Shri Life Plan are designed to provide both Life Insurance and a savings component. These plans provide a guaranteed payout either on maturity or in the event of death, whichever comes first. They provide moderate savings along with life coverage. While Endowment Plans typically have higher premiums than Term Insurance, they provide a more balanced combination of insurance and savings. Shriram Life's \u003Ca href=\\\"https://www.shriramlife.com/blog/advice/what-is-an-endowment-plan-in-life-insurance\\\" target=\\\"_blank\\\">Endowment Plans\u003C/a> allow policyholders to build savings while ensuring financial protection for their loved ones.\u003C/p>\u003Ch2>\u003Cstrong>Child Insurance Plans\u003C/strong>\u003C/h2>\u003Cp>Child Insurance plans are designed to secure a child’s financial future, especially for education needs. These plans combine Life Insurance with savings, providing a maturity benefit that can be used for the child’s education or other future needs. Shriram Life provides \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">Child Insurance plans\u003C/a> that ensure financial protection for your child's future, helping you save for important milestones like education while providing life coverage.\u003C/p>\u003Ch2>\u003Cstrong>Retirement Plans\u003C/strong>\u003C/h2>\u003Cp>Retirement or pension plans are designed to provide a regular income after retirement. These plans provide life cover during the accumulation phase and a steady income stream once the policyholder retires. Retirement plans ensure financial security in the later years of life. \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">Shriram Life’s retirement plans\u003C/a> are tailored to help you build a corpus during your working years, ensuring a reliable income post-retirement.\u003C/p>\u003Ch2>\u003Cstrong>The Role of Life Insurance in Financial Planning\u003C/strong>\u003C/h2>\u003Cp>As a cornerstone of financial planning, a Life Insurance policy provides,\u003C/p>\u003Col>\u003Cli>Income replacement for your family\u003C/li>\u003Cli>Funds to cover outstanding debts and mortgages\u003C/li>\u003Cli>Money for your children's education expenses\u003C/li>\u003Cli>Resources for your spouse's retirement planning\u003C/li>\u003Cli>A financial cushion to fall back whenever you’re financially down\u003C/li>\u003C/ol>\u003Cp>That’s not where the benefit ends. A Life Insurance policy provides you with a measurable goal to work towards. It helps you focus on a clear objective—protecting your loved ones' financial future in your absence. A Life Insurance policy doesn’t need much money to start. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a> provides a cash bonus from your first policy anniversary until the end of your policy term. With the minimum sum assured being ₹1,50,000, it requires only a small part of your earnings. A Life Insurance plan is a foundational financial net since it jumpstarts your savings and improves your budgeting habits.\u003C/p>\u003Cp>Psychologically, a good Life Insurance plan gives you considerable peace of mind since there is always an emergency fund you can fall back on. It also teaches you to make thoughtful investing decisions instead of moving haphazardly.\u003C/p>\u003Ch2>\u003Cstrong>Achieving Financial Goals with Life Insurance\u003C/strong>\u003C/h2>\u003Cp>Life Insurance can secure your investment and support your various financial goals. Here’s how\u003C/p>\u003Ch3>\u003Cstrong>1. Retirement Planning\u003C/strong>\u003C/h3>\u003Cp>Life Insurance helps your retirement planning by providing protection and providing a means to build wealth for the future. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/pension-plus\\\" target=\\\"_blank\\\">Shriram Life Pension Plus plan\u003C/a> can convert premium payments into a regular income stream during retirement, ensuring financial stability in your non-working years. Life Insurance policies are typically low-risk, ensuring guaranteed payouts and building a substantial retirement corpus. Additionally, Life Insurance addresses one of the biggest concerns of retirees: healthcare expenses, by helping cover medical costs for emergencies and preventive care. Moreover, Shriram Life Insurance plans provide tax benefits under Sections 80C and 10(10D) of the Income Tax Act, further maximizing your retirement savings.\u003C/p>\u003Ch3>\u003Cstrong>2. Savings for major life events\u003C/strong>\u003C/h3>\u003Cp>Using a general Life Insurance plan to save for significant expenses like your child's education, wedding, and other major life events is a viable strategy. Life Insurance policies, particularly endowment policies such as the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/new-shri-life-plan\\\" target=\\\"_blank\\\">New Shri Life Plan\u003C/a>, are designed for long-term savings and can help you accumulate a corpus over the years that can be used for these purposes. Additionally, the maturity benefits are tax-free under Section 10(10D), making it a tax-efficient way to save for your child's future. Many Life Insurance policies also provide a loan facility against the policy's surrender value, which can be helpful if you need immediate funds for education or wedding expenses without surrendering the policy. Depending on the type of policy, you can choose flexible payout options, such as a lump sum at maturity or periodic payments that align with milestones like your child's education or wedding.\u003C/p>\u003Ch3>\u003Cstrong>3. Wealth creation and investment\u003C/strong>\u003C/h3>\u003Cp>Life Insurance is often seen primarily as a financial backup, especially in the case of Term Insurance plans. However, Life Insurance can also be a powerful tool for investment and savings. It can help with capital appreciation and preservation, supporting your future financial goals. Life Insurance plans provide various benefits, including guaranteed life protection, tax savings, assured income, and both market and non-market-linked returns, making them versatile tools for achieving different financial objectives. You can use Life Insurance for goal-based investments, such as funding your child’s education, planning for retirement, purchasing a home, building emergency funds, and more. The key advantage of using Life Insurance for investments or savings is the flexibility to choose options that align with your risk appetite and investment budget. With various choices available, you can find a plan that best suits your needs. \u003C/p>\u003Ch2>\u003Cstrong>Benefits of Life Insurance for Long-Term Financial Security\u003C/strong>\u003C/h2>\u003Cp>Life Insurance provides significant benefits for long-term financial security, making it an essential tool for individuals looking to safeguard their family's future. In addition to providing financial protection, Life Insurance also provides attractive tax benefits. Premiums paid towards Life Insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act, reducing your taxable income. Furthermore, the maturity benefits or death benefit received by beneficiaries are generally tax-free under Section 10(10D), enhancing the overall value of your Life Insurance policy.\u003C/p>\u003Cp>Life Insurance also provides the opportunity to accumulate cash value over time, particularly in permanent Life Insurance policies such as whole and universal life. A portion of your premium goes towards building this cash value, which grows over time. Once you have accumulated enough cash value, you can access it through policy loans, withdrawals, or even use it as collateral for loans. These loans are typically flexible, allowing you to repay at your own pace. However, it’s important to note that if the loan exceeds the cash value or remains unpaid, it could affect your policy's status or reduce the death benefit.\u003C/p>\u003Cp>Furthermore, the cash value component can be used as a financial resource in times of need. You can withdraw funds from your policy for personal expenses or take a loan against the cash value to cover significant life events such as education or medical costs. While taking loans or withdrawals may reduce the death benefit, the ability to tap into the accumulated cash value provides added financial flexibility and helps support long-term goals like retirement or other large expenses.\u003C/p>\u003Ch2>\u003Cstrong>Real-Life Examples and Case Studies\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>1. Aditya Sharma’s Family and the Importance of Life Insurance (India)\u003C/strong>\u003C/h3>\u003Cp>Aditya Sharma, a professional from Kanpur, shares the pivotal role Life Insurance played in his family's financial security. His father, a disciplined saver, had always emphasized the importance of planning for unexpected events. Early in life, he chose a Life Insurance policy that would provide the necessary funds for the family in case something happened to him. Tragically, when Aditya’s father passed away, the Life Insurance policy was settled and provided critical financial support. Aditya and his brother were still in school, and this timely settlement ensured their education and living expenses were taken care of during the uncertain years that followed. Aditya credits this decision as the smartest financial move his father made, as it shielded the family from the harsh consequences of his untimely death.\u003C/p>\u003Ch2>\u003Cstrong>Choosing the Right Life Insurance Plan\u003C/strong>\u003C/h2>\u003Cp>When selecting a Life Insurance policy, making an informed decision that aligns with your financial goals is essential.\u003C/p>\u003Cp>\u003Cstrong>Here’s a walkthrough to help you choose the best policy:\u003C/strong>\u003C/p>\u003Cp>1. What are your financial goals: Are you securing your family’s financial future, saving for education, or ensuring retirement income? The right policy for you depends on your goals. \u003C/p>\u003Cp>2. To ensure your family’s needs are met, choose coverage at least 10-12 times your annual income, accounting for debts, liabilities, and future expenses. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Assured Income Plan\u003C/a> provides guaranteed income with a low premium payment.\u003C/p>\u003Cp>3. While affordability is important, ensure you’re getting adequate coverage and policy benefits. \u003Ca href=\\\"http://shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a> has multiple plans that help you choose the best one for you.\u003C/p>\u003Cp>4. The term should match the period your family will financially depend on you. For Term Insurance, subtract your current age from the age you expect to stop earning or achieve a major life goal.\u003C/p>\u003Cp>5. Select the Right Policy:\u003C/p>\u003Cul>\u003Cli>\u003Cstrong>Term Insurance:\u003C/strong> High coverage at affordable rates for a set period.\u003C/li>\u003Cli>\u003Cstrong>Endowment Plans:\u003C/strong> Combines Life Insurance with a savings component, providing a lump sum at maturity.\u003C/li>\u003Cli>\u003Cstrong>ULIPs:\u003C/strong> Flexible with investment options for long-term wealth accumulation.\u003C/li>\u003Cli>\u003Cstrong>Whole Life Insurance:\u003C/strong> Provides lifelong coverage with a cash value component.\u003C/li>\u003C/ul>\u003Cp>6. Your age, health, and lifestyle (e.g., smoking, drinking) influence premium costs. Younger, healthier individuals typically pay lower premiums.\u003C/p>\u003Cp>7. Know more about riders and other add-on benefits. For instance, riders like critical illness, accidental death, or waiver of premium can provide additional coverage, though they may increase your premium.\u003C/p>\u003Cp>8. Carefully read the policy details, including exclusions and limitations, to avoid surprises and ensure full transparency.\u003C/p>\u003Cp>9. If your policy includes a cash value component, know how it grows. This can be a valuable wealth-building tool over time.\u003C/p>\u003Cp>10. If you’re unfamiliar with Life Insurance, consider consulting a Shriram Life Insurance advisor to help you choose the most suitable policy based on your needs and financial goals.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>To summarize, Life Insurance is a critical component of long-term financial planning, providing benefits such as income replacement, debt coverage, and savings for major life events. Whether you're looking to protect your family's future, save for retirement, or accumulate wealth, there’s a Life Insurance policy to suit your needs. By carefully evaluating your financial goals, coverage amount, policy term, and type of policy, you can ensure that your Life Insurance choice aligns with your personal and family goals.\u003C/p>\u003Cp>We encourage you to consult with a financial advisor or Shriram Life Insurance expert today to make an informed decision tailored to your specific situation. Life Insurance isn’t just about protection—it’s a strategic tool to help secure your financial future. With products like the Shriram Life Assured Income Plan (AIP), you can enjoy guaranteed regular income, flexible policy terms, and the potential for bonus payouts, ensuring a steady income stream for the future. Additionally, the Shriram Early Cash Plan (ECP) combines life coverage with savings, providing dual financial protection benefits, a lump sum payout at maturity, and tax-saving advantages. Both plans are designed to help you achieve long-term financial goals while providing flexible premium payment options, making them ideal for securing your family’s future.\u003C/p>\u003Cp>Start planning today for a more secure tomorrow!\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"How to Choose Beneficiaries for Your Life Insurance Policy?\",\"heading\":\"How to Choose Beneficiaries for Your Life Insurance Policy?\",\"short_description\":\"\u003Cp>People buy Life Insurance policies to secure their family’s and other dependent’s financial future in the event of their untimely death.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/2.How%20to%20Choose%20Beneficiaries%20for%20Your%20Life%20Insurance%20Policy%20copy_0.webp?VersionId=oYq9U3B7o2fe0Bcrj0atDARCaajf.t.U\",\"alt\":\"Choosing beneficiary for life insurance\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-03T12:40:33\",\"updated_on\":\"2025-01-03T12:40:39\",\"read_more_title\":\"Know More\",\"slug\":\"/how-to-choose-beneficiaries-for-your-life-insurance-policy\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>\",\"description\":\"\u003Cp>People buy Life Insurance policies to secure their family’s and other dependent’s financial future in the event of their untimely death. However, the policy benefits can be useless to the family if the policyholder doesn’t appoint the correct insurance beneficiaries.\u003C/p>\u003Cp>If you want your family to live comfortably and meet all financial needs smoothly in case of the unfortunate event of your demise, then you must choose beneficiaries and add them to your policy when you purchase the plan. This Life Insurance guide covers more about beneficiaries, so your family doesn’t struggle with claiming the policy’s death benefits.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Beneficiaries\u003C/strong>\u003C/h2>\u003Cp>Before you proceed with naming beneficiaries in your policy, first understand who is eligible to become one. While most people choose individuals like their spouse, children, dependent parents, or other family members as insurance beneficiaries, some also choose a trust, business partner, or other entities.\u003C/p>\u003Cp>A Life Insurance policy beneficiary is legally entitled to receive the sum assured if a policyholder dies during the policy tenure. Before assigning beneficiary rights to anyone, remember that the beneficiaries in Life Insurance are of primarily two types:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Primary Life Insurance Beneficiary\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>A primary beneficiary is an individual who is legally entitled to receive the policy proceeds in the unfortunate event of a policyholder’s death. However, no proceeds can be claimed in his name if the primary beneficiary dies before the policyholder.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Secondary Life Insurance Beneficiary\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Also known as a contingent Life Insurance beneficiary, a secondary beneficiary refers to the individual who can claim policy proceeds if the primary beneficiary dies. There is a catch with contingent beneficiaries. They can only receive the beneficiary rights if the primary beneficiary dies before the policyholder.\u003C/p>\u003Ch2>\u003Cstrong>Factors to Consider When Choosing Beneficiaries\u003C/strong>\u003C/h2>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Family Members\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>When choosing Life Insurance beneficiaries, you must consider the family members dependent on you. A spouse, children, parents, siblings, and other relatives are common beneficiary choices. Consider the severity of the financial impact your family members may face in your absence, and choose the beneficiary accordingly. You can explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">Savings Plans\u003C/a>, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">Protection Plans\u003C/a>, and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/investment-plan\\\" target=\\\"_blank\\\">Investment Plans\u003C/a> to diversify and strengthen your financial well-being.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Financial Dependents\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can choose people financially dependent on you as the insurance beneficiaries. Parents, spouse, and children can only be listed in this case.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Charitable Organizations\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>If you want to give the policy proceeds to a trust or charitable organization, you must list its trustee as the beneficiary. The trustee can later claim the policy’s sum insured after your death.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Legal and Financial Implications\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Adding your family members or entities as beneficiaries in a Life Insurance Policy will give them legal rights to claim policy proceeds. They can receive direct payout into their account by avoiding potential legal complications like lengthy probate proceedings, complex estate planning proceedings, and other challenges. Beneficiaries will be subject to tax implications, depending on who the beneficiary is.\u003C/p>\u003Cp>For example, if a policyholder lists an estate as the beneficiary, their heirs must pay estate taxes. But if the beneficiary is a family member, then the death proceeds will be tax-free. If you invest in our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a> or other \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">Retirement Plans\u003C/a>, your spouse, children, parents, or other individual beneficiaries will receive tax benefits along with other advantages like returns powered by compounding, cash bonuses, etc.\u003C/p>\u003Ch3>\u003Cstrong>Updating Beneficiaries\u003C/strong>\u003C/h3>\u003Cp>Naming beneficiaries and updating them is crucial because it ensures the right beneficiaries receive the policy’s death benefits without any challenges. You shouldn’t add the beneficiary once and forget if you have a Life Insurance Policy. For example, if you purchased the policy when you were single, you would have listed your parents as the primary beneficiaries.\u003C/p>\u003Cp>But after your marriage, you must also include your spouse in the beneficiary list. Children can also be included after you become a parent. Similarly, you will need a beneficiary change in case of the unfortunate demise of the previously listed beneficiaries or the event of an unexpected event such as legal separation/divorce of spouses. It is important to plan your beneficiary list and update them as needed.\u003C/p>\u003Ch2>\u003Cstrong>Common Mistakes to Avoid\u003C/strong>\u003C/h2>\u003Cp>Some policyholders unknowingly make mistakes while listing their Life Insurance beneficiaries, leading to disputes during claim processing. If you don’t want your family to experience something similar, ensure you avoid making the following common mistakes.\u003C/p>\u003Ch3>\u003Cstrong>Naming a Minor as Beneficiary\u003C/strong>\u003C/h3>\u003Cp>If you list children aged below 18 as your beneficiaries and you die before they become adults, then insurance companies will not give policy proceeds to them. You can list a legal guardian or custodian for the child to manage money on your child’s behalf until your kids reach 18 years of age.\u003C/p>\u003Ch3>\u003Cstrong>Not Being Specific\u003C/strong>\u003C/h3>\u003Cp>Policyholders who have children from their previous marriage and current marriage should be specific while listing their beneficiaries. Instead of listing ‘my children’ as beneficiaries, mention the name of the children for clarity. It will avoid confusion at a later stage. The specificity rule should be followed by every policyholder, especially by people with complex family dynamics.\u003C/p>\u003Ch3>\u003Cstrong>Not Selecting a Contingent Beneficiary\u003C/strong>\u003C/h3>\u003Cp>Life is unpredictable, so you must choose beneficiaries accordingly. Instead of only choosing a primary beneficiary, list a contingent (secondary) beneficiary to ensure policy proceeds are received even if the primary beneficiary dies before the policyholder.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>People invest in Life Insurance policies so their dependents don’t face financial hardships after their death. However, the intended purpose of policy purchase cannot be fulfilled if the right beneficiaries aren’t listed in the policies. If you want your family or other dependents to live a life of ease and comfort when you’re not around, always list rightful beneficiaries. You must also review and update them from time to time, especially after events like a wedding, childbirth, divorce, etc.\u003C/p>\u003Cp>If you have finalized your beneficiaries and are looking for good policies to secure your family’s financial future, consider exploring our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Shriram Life Assured Income Plan\u003C/a>. It features multiple benefits, such as assured income, additional protection, higher benefits for higher premiums, etc. You can contact \u003Ca href=\\\"https://www.shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a> to seek guidance in choosing the right plan aligned with your financial goals.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"What is Life Insurance and How Does It Work?\",\"heading\":\"What is Life Insurance and How Does It Work?\",\"short_description\":\"\u003Cp>Life insurance is a type of financial protection you buy to support your loved ones if something happens to you.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/1.What%20is%20Life%20Insurance%20and%20How%20Does%20It%20Work__0.jpeg?VersionId=Xi69AartuVivJOMki1QrAFRIyI9QaDVU\",\"alt\":\"What is Life Insurance and How does it work?\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-02T12:05:36\",\"updated_on\":\"2025-01-02T12:05:42\",\"read_more_title\":\"Know More\",\"slug\":\"/what-is-life-insurance-and-how-does-it-work\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>\",\"description\":\"\u003Cp>Life insurance is a type of financial protection you buy to support your loved ones if something happens to you. It’s a contract between you and an insurance company: you pay a certain amount of money (called a premium) regularly, and in return, the insurance company promises to pay a certain sum of money (called a death benefit) to your beneficiaries in case of the unfortunate event of death.\u003C/p>\u003Cp>Life insurance aims to provide financial support to people who depend on you (the beneficiaries), such as your family, in the unfortunate case of you no longer being there to provide for them. There are different types of life insurance, but the basic idea is to ensure your family won't struggle financially after you’re gone. In this article, let us see how life insurance works and what are the different criteria needed to get life insurance for you and your family members.\u003C/p>\u003Ch2>\u003Cstrong>What Is Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Now that we understand what Life Insurance Policy is, consider the following example.\u003C/p>\u003Cp>Let us assume that Mr. Yash buys a Life Insurance Policy from \u003Ca href=\\\"https://www.shriramlife.com/\\\" target=\\\"_blank\\\">Shriram Life Insurance\u003C/a>. He opts for a 20-year term policy with a sum assured of ₹10 lakhs and agrees to pay an annual premium of ₹25,000 for the full 20 years.\u003C/p>\u003Cp>Here’s how his policy would work:\u003C/p>\u003Ch3>\u003Cstrong>If Mr. Yash completes the Policy Term\u003C/strong>\u003C/h3>\u003Col>\u003Cli>Over the 20 years, he has paid a total of ₹5 lakhs in premiums.\u003C/li>\u003Cli>At the end of the 20 years, Mr. Yash will receive the maturity benefit of ₹10 lakhs (the sum assured) plus any bonus or investment returns if applicable.\u003C/li>\u003Cli>The policy will end once the maturity benefit is paid out.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>In case of the unfortunate demise of Mr. Yash Dies during the 10th Policy Year\u003C/strong>\u003C/h3>\u003Col>\u003Cli>By the 10th year, Mr. Yash has paid a total of ₹2.5 lakhs in premiums.\u003C/li>\u003Cli>In the unfortunate case of his death, his family or nominees will receive ₹10 lakhs (the sum assured) plus any bonus (if applicable).\u003C/li>\u003Cli>The policy will terminate after the death benefit is paid.\u003C/li>\u003C/ol>\u003Ch3>\u003Cstrong>If Mr. Yash opts for Premium Protection in the Policy\u003C/strong>\u003C/h3>\u003Col>\u003Cli>In the unfortunate event of Mr. Yash passing away in the 10th year, his family will receive the death benefit of ₹10 lakhs immediately.\u003C/li>\u003Cli>The policy will continue accumulating the investment value, typically linked to the insurer's fund performance.\u003C/li>\u003Cli>At the end of the 20-year term, the insurer will pay the promised maturity benefit of ₹10 lakhs (sum assured) plus any applicable bonus to the beneficiaries or as a lump sum to Mr. Yash’s family.\u003C/li>\u003C/ol>\u003Ch2>\u003Cstrong>Types of Life Insurance\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Term Life Insurance\u003C/strong>\u003C/h3>\u003Cp>Term Life Insurance is a type of life insurance policy that provides coverage for a specific period, typically 10 to 30 years. When you purchase a term life insurance policy, you agree to pay premiums for the duration of the term. In return, the insurance company will provide a benefit to your beneficiaries if an unfortunate event occurs during the policy term. Term Life Insurance is often more affordable than permanent insurance, making it an attractive option for people who want financial protection for their loved ones without high costs. For instance, the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/online-term-plan\\\" target=\\\"_blank\\\">Shriram Online Term Plan\u003C/a> provides women with great payout options, superior coverage, and lower premium options.\u003C/p>\u003Cp>The main benefits of Term Life Insurance \u003Cspan>such as \u003C/span>\u003Ca href=\\\"https://www.shriramlife.com/life-insurance/family-protection-plan\\\">\u003Cspan>Shriram Life Family Protection Plan\u003C/span>\u003C/a>\u003Cspan> \u003C/span>are its affordability, flexibility, and financial protection for your family. It provides your beneficiaries with a lump sum or income if you die during the policy term. You can also add riders to your policy for extra coverage, such as protection for critical illness or accidental death. Additionally, the premiums for Term Life Insurance may be tax-deductible, and your family's death benefit is generally tax-free.\u003C/p>\u003Ch3>\u003Cstrong>Whole Life Insurance\u003C/strong>\u003C/h3>\u003Cp>Whole Life Insurance is a type of life insurance that provides coverage for your entire lifetime as long as you continue to pay the premiums. It combines a death benefit with a cash value component, which grows over time. One of the key benefits of Whole Life Insurance is the cash value, which accumulates on a tax-deferred basis. This cash value can be borrowed against or withdrawn for various needs or even used to pay premiums. Additionally, it provides a tax-free benefit to your beneficiaries. However, whole life insurance requires a long-term commitment. So, it is prudent to speak with a financial professional before opting for one.\u003C/p>\u003Ch2>\u003Cstrong>What Affects Your Life Insurance Premiums and Costs?\u003C/strong>\u003C/h2>\u003Cp>Several factors determine your life insurance premiums, reflecting the insurer's assessment of your risk profile. Key factors include:\u003C/p>\u003Ch3>\u003Cstrong>1. Age\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>Younger individuals pay lower premiums due to a lower risk of early death and fewer health issues.\u003C/li>\u003Cli>Older individuals face higher premiums due to increased health risks.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>2. Health\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Current health: \u003C/strong>Healthier individuals pay lower premiums, while those with chronic conditions face higher costs.\u003C/li>\u003Cli>\u003Cstrong>Family medical history:\u003C/strong> A history of hereditary diseases may increase premiums.\u003C/li>\u003Cli>\u003Cstrong>BMI: \u003C/strong>A healthy BMI can reduce premiums, as obesity increases health risks.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>3. Lifestyle\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Smoking: \u003C/strong>Smokers pay higher premiums due to the risk of smoking-related illnesses.\u003C/li>\u003Cli>\u003Cstrong>Alcohol: \u003C/strong>Excessive drinking raises premiums due to risks like liver disease.\u003C/li>\u003Cli>\u003Cstrong>Risky activities:\u003C/strong> Engaging in high-risk hobbies or jobs increases premiums due to accident potential.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>4. Gender\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>Women generally pay lower premiums due to longer life expectancy.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>5. Policy Details\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Coverage amount: \u003C/strong>Higher coverage and permanent policies result in higher premiums due to extended benefits.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>6. Occupation\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>High-risk jobs: \u003C/strong>Dangerous professions, such as construction or aviation, lead to higher premiums.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Life Insurance Buying Guide\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Step-by-Step Guide to Purchasing Life Insurance:\u003C/strong>\u003C/h3>\u003Ch4>Step 1: Calculate How Much Coverage You Need\u003C/h4>\u003Cp>Start by estimating how much life insurance your family will need. A common rule is \u003C/p>\u003Cp>Coverage = (Annual Income × 10–15) + Debts + Future Costs + Living Expenses − Savings − Investments\u003C/p>\u003Cp>This ensures your family can maintain their lifestyle and meet financial needs if something happens to you. You can visit Shriram Life Insurance plans to see which plans would suit your financial goals better.\u003C/p>\u003Ch4>Step 2: Gather Documents for Your Application\u003C/h4>\u003Cp>Prepare essential documents like a photo ID, address proof, and social security number (your Aadhar number). Collect medical history details, including existing conditions, medications, and surgeries. Have information about your job, income, and financial situation ready, such as pay stubs and tax returns. If you already have life insurance policies, keep those details on hand. Be honest, as inaccuracies can delay approval.\u003C/p>\u003Ch4>Step 3: Compare Policy Options\u003C/h4>\u003Cp>Request quotes from different insurers. Don’t just look at the price—compare coverage, benefits, and the company’s reliability. Understand the differences between term life, whole life, and universal life policies. Look into riders, conversion options, and potential premium changes. A financial advisor can help you pick a policy that balances affordability with strong coverage for your family.\u003C/p>\u003Ch2>\u003Cstrong>Who can benefit from a life insurance policy?\u003C/strong>\u003C/h2>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cstrong>Key Group\u003C/strong>\u003C/td>\u003Ctd>\u003Cstrong>Explanation\u003C/strong>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Families\u003C/td>\u003Ctd>Life insurance can ensure financial security for your spouse and children, especially if you are the primary income earner.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Individuals with Debts\u003C/td>\u003Ctd>If you have significant debts, life insurance can help pay them off, preventing financial hardship for your loved ones.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd rowspan=\\\"4\\\">Business Owners\u003C/td>\u003Ctd>Life insurance can be used to:\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Protect business continuity: Provide funds to replace key employees or cover business debts.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Fund buy-sell agreements: Ensure a smooth transition of ownership in the event of a partner's death.\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>Provide liquidity for estate taxes: Pay estate taxes and avoid forced asset sales.\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>What to Do Before Buying Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Before purchasing a Life Insurance Policy, it is important to analyze the death benefits and other financial obligations and goals. Let's break down the key factors:\u003C/p>\u003Ch3>\u003Cstrong>Immediate Needs\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Medical Bills: \u003C/strong>Any outstanding medical bills or final medical expenses should be accounted for.\u003C/li>\u003Cli>\u003Cstrong>Debt Repayment:\u003C/strong> This includes mortgages, car loans, credit card debt, and other outstanding loans.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>Long-Term Needs.\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Income Replacement:\u003C/strong> Calculate the income your family relies on and determine how long they might need that income.\u003C/li>\u003Cli>\u003Cstrong>Childcare Costs: \u003C/strong>If you have young children, factor in the cost of childcare until they reach adulthood.\u003C/li>\u003Cli>\u003Cstrong>Education Costs: \u003C/strong>Consider tuition, fees, and living expenses for your children's education.\u003C/li>\u003Cli>\u003Cstrong>Retirement Savings: \u003C/strong>If your death could impact your spouse's \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a>, factor in the amount needed to maintain their desired lifestyle.\u003C/li>\u003C/ul>\u003Ch3>\u003Cstrong>A More Detailed Approach\u003C/strong>\u003C/h3>\u003Cp>While the 10-15 times annual income rule is a useful starting point, a more accurate assessment involves a detailed financial analysis.\u003C/p>\u003Cp>Here's a suggested approach:\u003C/p>\u003Cp>1. \u003Cstrong>Create a Financial Inventory:\u003C/strong> List all your assets, debts, and monthly expenses.\u003C/p>\u003Cp>2. \u003Cstrong>Estimate Future Expenses: \u003C/strong>Project future costs, such as college tuition and retirement savings.\u003C/p>\u003Cp>3. \u003Cstrong>Consider Inflation: \u003C/strong>Account for the rising cost of living over time.\u003C/p>\u003Cp>4. \u003Cstrong>Consult a Financial Advisor: \u003C/strong>A professional can help you assess your needs and recommend the appropriate coverage.\u003C/p>\u003Ch2>\u003Cstrong>How Life Insurance Works\u003C/strong>\u003C/h2>\u003Cp>\u003Cstrong>Death Benefit: \u003C/strong>The core component of life insurance is the death benefit, a lump sum payment made to your beneficiaries upon death. This payment can help cover final expenses, and debts, and provide ongoing financial support for your loved ones.\u003C/p>\u003Cp>\u003Cstrong>Premium: \u003C/strong>A premium is the regular payment you make to the insurance company to maintain your policy. The premium amount is determined by several factors, including:\u003C/p>\u003Cul>\u003Cli>Age\u003C/li>\u003Cli>Health\u003C/li>\u003Cli>Occupation\u003C/li>\u003Cli>Lifestyle\u003C/li>\u003Cli>Policy Type\u003C/li>\u003C/ul>\u003Cp>\u003Cstrong>Cash Value (Permanent Life Insurance Only):\u003C/strong> A portion of your premium in a permanent life insurance policy accumulates over time, creating a cash value. \u003C/p>\u003Cp>This cash value can be:\u003C/p>\u003Cul>\u003Cli>\u003Cstrong>Borrowed Against: \u003C/strong>You can borrow against the cash value, but interest will accrue on the loan.\u003C/li>\u003Cli>\u003Cstrong>Withdrawn: \u003C/strong>You can withdraw funds from the cash value, which may reduce the death benefit.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Life Insurance Riders and Policy Changes\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Policy Customizations:\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Riders:\u003C/strong> Additional coverage options that can be added to your policy, such as:\u003Cul>\u003Cli>Accidental Death Benefit.\u003C/li>\u003Cli>Critical Illness Rider.\u003C/li>\u003Cli>Long-Term Care Rider.\u003C/li>\u003Cli>Waiver of Premium Rider.\u003C/li>\u003C/ul>\u003C/li>\u003Cli>\u003Cstrong>Policy Changes:\u003C/strong> You may be able to make changes to your policy, such as increasing or decreasing the death benefit or adding or removing riders.\u003C/li>\u003C/ul>\u003Ch2>\u003Cstrong>Qualifying for Life Insurance\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>Eligibility Criteria:\u003C/strong>\u003C/h3>\u003Cul>\u003Cli>\u003Cstrong>Age:\u003C/strong> Most insurers have minimum and maximum age limits.\u003C/li>\u003Cli>\u003Cstrong>Health: \u003C/strong>Your health history and current health condition can affect your eligibility and premium rates.\u003C/li>\u003Cli>\u003Cstrong>Occupation: \u003C/strong>Hazardous occupations may require additional underwriting or higher premiums.\u003C/li>\u003Cli>\u003Cstrong>Lifestyle: \u003C/strong>Factors like smoking and excessive alcohol consumption can impact your eligibility.\u003C/li>\u003C/ul>\u003Cp>In conclusion, life insurance is a valuable tool for financial security. By understanding the different types of policies, factors affecting premiums, and the steps involved in purchasing life insurance, you can make informed decisions to protect your loved ones. Remember to assess your specific needs, compare policies from different insurers, and consult a financial advisor to ensure you have the right coverage. By taking these steps, you can know that your family's financial future is secure.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"Tax Saving Benefit: How Life Insurance Can Help You Save\",\"heading\":\"Tax Saving Benefit: How Life Insurance Can Help You Save\",\"short_description\":\"\u003Cp>People invest in Life Insurance to financially secure their family, in case of unfortunate circumstances of them not being there.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2025-01/46.%20Tax%20Saving%20Benefit_%20How%20Life%20Insurance%20Can%20Help%20You%20Save_0.png?VersionId=D6uTTAJ02IyULHL7CkAhId58AlT2k4He\",\"alt\":\"Tax Saving Benefit: How Life Insurance Can Help You Save\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2025-01-01T09:20:58\",\"updated_on\":\"2025-01-01T09:21:05\",\"read_more_title\":\"Know More\",\"slug\":\"/how-life-insurance-can-help-you-save-tax\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/savings\\\" hreflang=\\\"en\\\">Savings\u003C/a>, \u003Ca href=\\\"/blog/guides/insurance-policy\\\" hreflang=\\\"en\\\">Insurance Policy\u003C/a>, \u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>\",\"description\":\"\u003Cp>People invest in Life Insurance to financially secure their family, in case of unfortunate circumstances of them not being there. However, this investment also provides Life Insurance tax benefits. You can enjoy plenty of tax benefits if you strategize your investments and choose the right Life Insurance, sum assured, and premium amount. This blog explains how policyholders can reduce tax liabilities and optimize returns using the right tax-saving strategies. \u003C/p>\u003Ch2>\u003Cstrong>What is Life Insurance and How Does it Work?\u003C/strong>\u003C/h2>\u003Cp>Before we get into the details of Life Insurance tax benefits, let’s start by understanding what Life Insurance is and how it works. If you’re beginning your investment journey, start by choosing the right Life Insurance Plan. This plan takes care of your family’s financial future in case of your death. \u003C/p>\u003Cp>You pay premiums for a specific period determined in the policy, and in return, the insurer releases the accumulated funds in the form of maturity or death proceeds. Many people include Life Insurance in financial planning because it provides dual tax savings and financial security benefits. At Shriram Life Insurance, we provide a wide range of \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">protection plans\u003C/a> that feature insurance coverage paired with other benefits.\u003C/p>\u003Ch2>\u003Cstrong>What are the Life Insurance Tax Benefits?\u003C/strong>\u003C/h2>\u003Cp>All Life Insurance policies in India enable policyholders to save taxes by deducting the amount paid towards premiums in their income tax returns. These tax deductible premiums help lower tax liability for a particular financial year while accumulating Life Insurance coverage benefits for their family. \u003C/p>\u003Cp>If you want to do strategic tax planning with Life Insurance, always remember that tax benefits are available in two forms: Tax deductions and tax exemptions.\u003C/p>\u003Cp>\u003Cstrong>Tax deductions \u003C/strong>refer to the amount you can deduct from your Gross Total Income (GTI) while filing the income tax return. It can significantly reduce the amount of tax payable. Tax deductible premiums can be claimed under different sections of the Income Tax, 1961, which are covered later in this article.\u003C/p>\u003Cp>\u003Cstrong>Tax exemptions\u003C/strong> are another important aspect of tax benefits. Tax exemptions refer to the part of your insurance earnings or proceeds that are naturally exempted from tax. For instance, tax-free death benefits come under tax exemption, not deduction. \u003C/p>\u003Ch2>\u003Cstrong>How to Save Income Tax with a Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>The multiple features of Life Insurance for saving are frequently discussed among working individuals, but its tax benefits aren’t talked about enough. If you have an insurance policy or are planning to buy one, you can enjoy tax savings at the following stages:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Entry Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>At this stage, you can deduct the amount paid towards the policy’s premium under relevant sections for tax savings. For example, if you have paid ₹ 50,000 as a Life Insurance premium in one financial year, you can claim the whole amount as deduction u/s 80C. It is among the most common tax-saving techniques for salaried employees and self-employed individuals. Tax savings through section 80C are for Life Insurance, 80D is for health insurance, and 80CCC is for pension plans. We will discuss these sections in detail later in this article. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Earnings Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Since most Life Insurance policies have a long-term tenure, your investment keeps growing because of the power of compounding. The best part is the earnings during this stage are non-taxable, provided you don’t withdraw them prematurely. If you invest in our unit-linked \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> or \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">child plans\u003C/a>, you can enjoy growth over a period without worrying about paying taxes on the earned amount. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Exclusive Switching Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can enjoy tax-free switching if you want to switch between your investments in unit-linked insurance plans. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Exit Advantage\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>It is the last stage of your policy, where you begin to receive payouts or proceeds from the insurer. Most proceeds are exempted from tax u/s 10 (10D), subject to certain conditions. You can get detailed information about 10(10D) tax benefits in the following section.\u003C/p>\u003Ch2>\u003Cstrong>Tax Benefits on Life Insurance Policies Under Different Sections of the Income Tax Act, 1961\u003C/strong>\u003C/h2>\u003Cp>You can get Life Insurance tax benefits under different yet relevant sections of the Income Tax Act, 1961. Most deductions fall under the following sections:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80C\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Policyholders can claim a deduction for the amount paid towards insurance premium u/s 80C, up to a maximum limit of ₹ 1.50 lakh per annum. The Tax Benefit of 80C can be availed if the premium exceeds 10% of the policy’s sum assured amount, then tax will be levied proportionally. If you invest in our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/early-cash-plan\\\" target=\\\"_blank\\\">Shriram Life Early Cash Plan\u003C/a>, you can enjoy tax-deductible premiums u/s 80C. This plan provides life coverage with added benefits such as a cash bonus guarantee, wealth creation through compounding, capital guarantee, and more. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80D\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Policyholders who have invested in health insurance plans can claim the premium payment amount as a deduction u/s 80D. The deduction is capped at ₹25,000 per annum, but you can claim an additional ₹25,000 per annum if you’ve taken a policy for your parents. You can claim ₹50,000 per annum as a deduction if your parents are senior citizens.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 10(10D)\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>This section ensures that the proceeds received by nominees in case of the policyholder’s death are fully exempt from tax. Any attached incentives or surrendering value is also exempted from tax. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80CCC\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>You can claim deductions toward the premium paid for designated pension plans. The deductions are capped at a combined limit of ₹1.50 lakh per annum u/s 80C and 80CCD(1). If you surrender the policy prematurely, then the amount received on surrendering will be taxable as regular income. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 10 (10A)\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>The accumulated (commuted) pension amount received by government employees are exempted from tax u/s 10(10A). However, an uncommuted or monthly pension is taxable as a regular salary.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Section 80CCE\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>This section limits the total eligible deduction amount to ₹1.50 lakh per annum for multiple policyholders. The limit includes combined total deductions u/s section 80C, 80CCC, and 80CCD(1). \u003C/p>\u003Ch2>\u003Cstrong>What are the Potential Tax Benefits on Riders of Life Insurance?\u003C/strong>\u003C/h2>\u003Cp>Riders are great tools to enhance the coverage of a standard Life Insurance policy, but they also contribute to tax savings. According to Section 80D, if you buy a term insurance plan with health-related riders like hospital care rider, critical illness, surgical care, etc., you can get a deduction of up to ₹25,000. You can get an additional ₹25,000 deduction limit on similar plans purchased for parents. \u003C/p>\u003Cp>This limit is further increased to ₹50,000 if you’re buying policies for parents aged 60+/senior citizens. Hence, always evaluate different tax saving strategies before investing in any plan. You must explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/premier-assured-benefit-plan\\\" target=\\\"_blank\\\">Shriram Life Premier Assured Benefit Plan\u003C/a> if you want to buy a Life Insurance that provides higher returns for higher premiums and also helps you save tax on riders. It is one of our best savings plans that also provide life coverage and various other benefits. \u003C/p>\u003Ch2>\u003Cstrong>What is TDS on Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>Tax Deducted at Source (TDS) is generally charged on eligible financial products, including insurance plans, potentially lowering the maturity proceeds. If you receive payouts of more than ₹1,00,000 upon policy maturity, then the insurer will deduct a 5% TDS before releasing the funds. No TDS on Life Insurance will be deducted if the amount is lower than ₹1,00,000.\u003C/p>\u003Cp>Additionally, no TDS will be deducted if the plan falls u/s 10(10D), premium payment doesn’t exceed 10% of the sum assured value (for policies purchased after 1st April 2021), or the amount is received u/s 80DD(3) or 80DDA(3). If you purchased the plan between 1st April 2003 and 31st March 2012, then TDS on Life Insurance won’t be deducted if the premium payments don’t exceed 20% of the policy’s total sum assured. \u003C/p>\u003Ch2>\u003Cstrong>What is GST on Life Insurance Policy?\u003C/strong>\u003C/h2>\u003Cp>Goods and Services Tax, a.k.a. GST, is an indirect tax imposed on certain goods and services. Policyholders pay a flat 18% GST on all insurance policy premiums. Previously, policyholders paid a 15% service tax, including the Krishi Kalyan cess and Swachh Bharat cess. It has not been replaced by GST. \u003C/p>\u003Ch3>\u003Cstrong>Eligibility Criteria to Claim Life Insurance Tax Benefits\u003C/strong>\u003C/h3>\u003Cp>Life Insurance tax benefits are available to all individuals and Hindu Undivided Families (HUFs). They can claim tax benefits on premium payments and maturity proceeds under relevant sections of the Income Tax Act, 1961. \u003C/p>\u003Ch3>\u003Cstrong>Tax Benefits for Single Premium Insurance Policies\u003C/strong>\u003C/h3>\u003Cp>Single premium insurance policies are also eligible for tax deductions u/s 80C. The premium paid on these policies can be claimed as a deduction u/s 80C. The only difference between single premium and multiple premium policies is that the former only gets one tax deduction in the payment year, whereas the policyholder can enjoy deductions on multiple premium payments every year. As discussed above, the maturity proceeds are taxed as any other insurance policy.\u003C/p>\u003Ch3>\u003Cstrong>Advantages and Tax Implications of Exiting a Life Insurance Policy\u003C/strong>\u003C/h3>\u003Cp>The biggest advantage of exiting a Life Insurance policy is getting instant funds to meet unexpected, immediate expenses. The tax implications will depend on the policy type, amount, number of premiums paid to date, how long you held the policy, and various other factors. \u003Cbr />For example, if you surrender an endowment insurance plan, you only enjoy tax benefits if you’ve paid the premiums for the first two years. In the case of ULIP, tax benefits will only apply if you surrender the policy after five years. So, always check the type of policy you have to determine the relevant tax implications. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Life Insurance is a must-have investment for every individual because it ensures the policyholder’s financial future is secured and stable. While these plans are primarily designed for financial security, they also provide tax benefits to all policyholders. You can use the information discussed in this article to plan effective tax savings strategies for optimal benefits. You can also invest in Shriram Life Insurance plans to enjoy dual benefits of life cover and tax benefits.\u003C/p>\u003Cp>If you want to build wealth over time while maintaining secure life coverage, then you must explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/assured-income-plan\\\" target=\\\"_blank\\\">Shriram Life Assured Income Plan\u003C/a>. It provides numerous benefits like flexible premiums, additional protection, assured income, etc., in addition to tax savings. We have various plans designed for protection, savings, retirement, etc., so explore all and invest in the ones that seamlessly align with your financial goals.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"What are the different types of investments in India? How do they work?\",\"heading\":\"What are the Different Types of Investments in India? How do they Work?\",\"short_description\":\"\u003Cp>Investing in the right financial products and plans is the wisest way to build wealth over time, outpace inflation, and achieve your financial goal\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2024-12/42.%20What%20are%20the%20different%20types%20of%20investments%20in%20India_%20How%20do%20they%20work__0.png?VersionId=gDVzrbzp8juMdFIdnvDDjEgFYKfvm8bH\",\"alt\":\"How do different types of investments in India\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2024-12-31T10:54:11\",\"updated_on\":\"2024-12-31T10:54:24\",\"read_more_title\":\"Know More\",\"slug\":\"/different-types-of-investments-in-india\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/investments\\\" hreflang=\\\"en\\\">Investments\u003C/a>\",\"description\":\"\u003Cp>Investing in the right financial products and plans is the wisest way to build wealth over time, outpace inflation, and achieve your financial goals. The biggest roadblock people face while beginning their investment journey is choosing the right investment options. Since the Indian financial market has grown significantly, it now provides different types of investments in India. This article covers the top investment options in India, so you have a good starting point for your investment journey. So, let’s explore the top and most common investment options shared below:\u003C/p>\u003Ch2>\u003Cstrong>Stocks\u003C/strong>\u003C/h2>\u003Cp>Also known as equities, stocks are certificates of ownership in a company. After carefully evaluating the company profile, market conditions, and other economic factors, you can purchase stocks from stock exchanges, like the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), etc. Buying a share is similar to purchasing a portion of the company, making you eligible to benefit from its growth and profits. \u003C/p>\u003Cp>Investors can benefit from stock investments by selling the shares at a higher price when share prices rise and receiving dividends from the company’s profits. Stocks are among the riskiest types of investments in India because of market volatility, but they also have higher return potential. \u003C/p>\u003Ch2>\u003Cstrong>Bonds\u003C/strong>\u003C/h2>\u003Cp>Bonds are debt instruments issued to raise money from the market for a predetermined period. When you invest in bonds in India, you’re lending money to the bond issuer for a specific period. You get rewarded for this investment by receiving fixed or varying interests at predetermined intervals, depending on the bond type and issuer. You also receive the original investment (principal) amount back upon maturity. \u003C/p>\u003Cp>Bond investments are relatively safer than stocks because they provide a more predictable return as interest. If you’re looking for investment with good returns, search for bonds issued by governments, reliable corporations, or entities with good credit ratings. Alternatively, you can invest in safer bonds via debt mutual funds.\u003C/p>\u003Ch2>\u003Cstrong>Real Estate\u003C/strong>\u003C/h2>\u003Cp>Real estate is among the most common types of investment people make to generate profit. If you have enough capital, you can purchase properties and give them on rent for a fixed monthly rental income. People who don’t like the hassle of finding tenants and managing properties can invest in Real Estate Investment Trusts (REITs).\u003C/p>\u003Cp>If you’re new to REITs, then refer to companies that own and operate income-generating properties. Investing in REITs makes you eligible to receive a percentage of profits. You can explore other avenues to earn profits from real estate that align with your financial goals, risk profile, and lifestyle.\u003C/p>\u003Ch2>\u003Cstrong>Fixed Deposits\u003C/strong>\u003C/h2>\u003Cp>Conservative investors looking for the safest types of investment decisions may consider investing in fixed deposits. It is a secure agreement wherein you agree to deposit a fixed amount of money for a specific tenure in exchange for fixed interest income. All banks and similar financial institutions provide fixed deposits. The most notable benefits of investing in fixed deposits are their safety and stability. You will still receive the fixed interest income even if market conditions become volatile.\u003C/p>\u003Ch2>\u003Cstrong>Mutual Funds\u003C/strong>\u003C/h2>\u003Cp>Mutual funds are a basket of investments comprising diversified portfolio assets like stocks, bonds, and other financial securities. When you invest in these funds, you essentially gain ownership of a portion of the fund’s assets. All returns from mutual funds are based on the fund’s performance.\u003C/p>\u003Cp>Since professional fund managers manage them, you don’t have to independently research different stocks and securities before investing. Mutual funds provide diversification, liquidity, and ease of investment through a Systematic Investment Plan (SIP), making them a desirable investment option for most busy individuals.\u003C/p>\u003Ch2>\u003Cstrong>Public Provident Fund (PPF)\u003C/strong>\u003C/h2>\u003Cp>It is one of the safest types of investments in India because the Indian government regulates it. Public Provident Fund (PPF) is a long-term investment option designed to support people’s retirement years. Investors can invest in PPF during their working years for a specific duration. In exchange, they receive a fixed income during their retirement years. PPF plans generally have a long lock-in period and provide tax deduction benefits u/s 80 C. If you want to diversify your investment options, you can explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> and savings plans.\u003C/p>\u003Ch2>\u003Cstrong>National Pension System (NPS)\u003C/strong>\u003C/h2>\u003Cp>Anyone wanting to create a secure income stream for retirement years must consider the National Pension System (NPS). It is among the safest types of investment you can have in your portfolio. Any Indian citizen aged 18 to 65 can invest in NPS. When you contribute to NPS, professional fund managers invest the amount in equity, bonds, and a mix of securities per your chosen investment plan. This investment grows over time, and the accumulated amount is used to give you a pension after retirement.\u003C/p>\u003Ch2>\u003Cstrong>Unit-Linked Insurance Plans (ULIP)\u003C/strong>\u003C/h2>\u003Cp>Unit-Linked Insurance Plans (ULIP) are among the \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/investment-plan\\\" target=\\\"_blank\\\">best investment plans\u003C/a> in India because they provide dual benefits of investment and insurance. When you invest in ULIPs, a portion of your investment is used to provide insurance coverage and the remaining is invested in market-linked securities. These plans are ideal for people with moderate to high-risk appetites.\u003C/p>\u003Cp>\u003Ca href=\\\"https://www.shriramlife.com/life-insurance/golden-jubilee-plan\\\" target=\\\"_blank\\\">Shriram Golden Jubilee Plan\u003C/a> is a unit-linked non-participating plan that provides dual benefits of investment and protection. The top benefits of investing in this plan include flexibility, partial withdrawals, tax benefits, etc. You can also explore \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/wealth-pro\\\" target=\\\"_blank\\\">Shriram Life Wealth Pro\u003C/a>, a unit-linked plan designed to grow wealth and protect your family’s financial future. It provides customized life coverage, greater liquidity, multiple fund options, and more.\u003C/p>\u003Ch2>\u003Cstrong>Senior Citizens Savings Scheme (SCSS)\u003C/strong>\u003C/h2>\u003Cp>SCSS is a government-backed savings scheme designed to provide steady income to retirees and senior citizens. Residents over 60 can invest in SCSS for a block of 5 years and extend it another 3 years later. Senior citizens receive interest income on their contributions, and the government reviews it quarterly. While this plan provides numerous benefits, like a nomination facility, relatively high interest rate, predictable income, etc., premature closing can attract penalties. \u003C/p>\u003Ch2>\u003Cstrong>Savings/Endowment Plans\u003C/strong>\u003C/h2>\u003Cp>Savings and endowment plans are life insurance plans that provide the dual benefits of savings and insurance. Out of all the different types of investments in India, these are suitable for people who want to secure their family’s financial future while saving money to achieve specific financial goals. \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/fortune-builder\\\" target=\\\"_blank\\\">Shriram Life Fortune Builder plan\u003C/a> is an ideal example. It provides long-term life insurance coverage while giving savings benefits.\u003C/p>\u003Cp>It comes with additional protection through riders, unlimited fund switches, flexible settlement options, and more. People focused on building wealth while protecting their family’s financial future must explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/growth-plus\\\" target=\\\"_blank\\\">Life Growth Plus plan\u003C/a>. It provides life cover and savings benefits through market-linked earnings.\u003C/p>\u003Ch2>\u003Cstrong>Retirement Annuity Plans\u003C/strong>\u003C/h2>\u003Cp>Retirement annuity plans are designed to provide a steady, predictable income during your golden years. You invest in these plans in multiple premium payments or a one-time lump sum amount. In return, the insurer provides a fixed income post-retirement for a predetermined period. It is a good retirement investment plan for senior citizens who want financial stability in their non-working years. You can further strengthen your retirement planning by diversifying your investment pool. Explore our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">protection plans\u003C/a> to find a policy that complements your other investments.\u003C/p>\u003Ch2>\u003Cstrong>Gold\u003C/strong>\u003C/h2>\u003Cp>Out of all the types of investment decisions you make, including gold in your investment portfolio can be the most rewarding. Gold has been used as a hedge against inflation for decades and is often seen as a safe investment asset that doesn’t slump during economic uncertainties. It is also perfect for diversifying your portfolio as it generally moves in the opposite direction of the stock market. Hence, gold prices will rise when stock prices go down, balancing the risk factor in your portfolio. Depending on your investment preferences, you can invest in physical gold, sovereign gold bonds (SGBs), gold mutual funds, or gold exchange-traded funds (ETFs).\u003C/p>\u003Ch2>\u003Cstrong>Risk Level of Investment Options\u003C/strong>\u003C/h2>\u003Cp>All types of investments in India carry a certain level of risk. Common investment options typically have the following risk profiles:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan>\u003Cstrong>Investment\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>\u003Cstrong>Risk Profile\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Stocks\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Bonds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low to moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Real Estate\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Fixed Deposits\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Mutual Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Public Provident Funds (PPF)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>National Pension System (NPS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Unit-Linked Insurance Plan (ULIP)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate to high risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Senior Citizens Savings Scheme (SCSS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Retirement Annuity Schemes\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan>Gold\u003C/span>\u003C/td>\u003Ctd>\u003Cspan>Low to moderate risk\u003C/span>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Benefits of Investments \u003C/strong>\u003C/h2>\u003Cp>Everyone should start investing early to enjoy its multiple benefits. The top benefits of investing include:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Wealth Creation:\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing in the right options will help you build and grow your wealth. Whether you invest in stocks, mutual funds, real estate, etc., you can expect to build significant wealth through the power of compounding and capital appreciation.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Financial Security\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing in the right securities and plans will safeguard you and your family’s financial future, bringing ease and peace of mind. It will act as a financial cushion during times of emergency. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Beating Inflation\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Market-linked investments have the potential to generate higher returns that can outweigh inflation. It will help you preserve your money’s purchasing power. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Tax Benefits\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Many investment options provide tax benefits on contribution amount and maturity proceeds. Since not every investment has the same tax benefits, always check tax implications specific to your investments. \u003C/p>\u003Ch2>\u003Cstrong>How to Invest?\u003C/strong>\u003C/h2>\u003Cp>The different types of investments in India can easily overwhelm anyone. You can use the following tips to invest in the right financial products or plans:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Set Clear Financial Goals\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Always start by defining your financial goals, as this can help you narrow down potential investment options. For example, retirees wanting a steady income may choose a retirement annuity plan, whereas young individuals wanting to build wealth can explore equity investing.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Understand Your Risk Tolerance\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>All investment options carry a certain degree of risk, so investing is recommended based on your risk tolerance. Fixed deposits, NPS, and PPF, are ideal for people with low-risk profiles, whereas stocks, mutual funds, ULIPs, etc., are recommended for people with moderate to high-risk appetite.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Research Carefully\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>The Indian financial market is vast, so always research about the investments you plan to include in your portfolio. Align it with your risk tolerance to make safer choices. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Diversify Your Portfolio\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Never build your portfolio around a single asset class. A diversified portfolio featuring stocks, annuity plans, fixed deposits, balanced mutual funds, bonds, gold, etc., is a better option because it minimizes risk and balances returns.\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Start Early and be Consistent\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investing early will give you the benefit of compounding, and being consistent will ensure you continue building wealth while securing your family’s future. \u003C/p>\u003Ch2>\u003Cstrong>Things to Cover While Investing\u003C/strong>\u003C/h2>\u003Cp>To enjoy optimal benefits from investing in India, ensure you remain vigilant in the following areas:\u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Fraudulent Activities/Platforms\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Be wary of any investment plan or platform that promises unrealistic or guaranteed risk-free, high returns. Avoid investing through unregistered platforms by verifying every platform’s registration details on SEBI’s website. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Factor in Investment Risks\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>Investments are influenced by various factors, making them risky. Hence, always factor in market fluctuations and focus on building a diversified portfolio that balances risk profile and optimises returns. \u003C/p>\u003Cul>\u003Cli>\u003Ch3>\u003Cstrong>Safeguard Your Interests\u003C/strong>\u003C/h3>\u003C/li>\u003C/ul>\u003Cp>As an investor, you must take proactive steps to secure yourself and your investments. For example, never invest without doing due research or being aware of hidden fees charged by platforms or brokers. \u003C/p>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Investing is a must for every individual who wants to achieve financial stability, security, and goals over a period. If you are hesitant to start your investing journey because of the wide range of investment options, consider using this article as the starting point for exploring the top options. You can also check the different retirement, \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings\u003C/a>, protection, and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">child plans\u003C/a> at Shriram Life Insurance to build a stable financial future. Each plan is diverse and comes with unique features, so explore the relevant plans and invest accordingly.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"What should I consider when choosing long-term investment options in India\",\"heading\":\"What Should I Consider When Choosing Long-Term Investment Options in India?\",\"short_description\":\"\u003Cp>Long-term investment planning is important for anyone who wants to financially secure their future and achieve financial stability.\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2024-12/41.%20What%20should%20I%20consider%20when%20choosing%20long-term%20investment%20options%20in%20India_0.png?VersionId=8pGAAzuTzmvFxymBNLjReLXimW49o15x\",\"alt\":\"Benefits of choosing long term investment options in India\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2024-12-30T10:50:50\",\"updated_on\":\"2024-12-30T10:50:55\",\"read_more_title\":\"Know More\",\"slug\":\"/what-should-i-consider-when-choosing-long-term-investment-options-in-india\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>, \u003Ca href=\\\"/blog/guides/investments\\\" hreflang=\\\"en\\\">Investments\u003C/a>\",\"description\":\"\u003Cp>Long-term investment planning is important for anyone who wants to financially secure their future and achieve financial stability. These investments deliver returns using the benefit of compounding, where your investments grow over a period. They also help ensure your money grows and retains its purchasing power against the effect of inflation and rising prices and cost of living. Unlike short-term investments, long-term investment options provide greater stability by lowering the impact of market volatility, especially when you stay invested through market cycles.\u003C/p>\u003Cp>While everyone knows the importance of buying long-term investments, many find the wide range of options overwhelming, making it seem challenging to select the right investments. It often prevents them from starting their investment journey at the appropriate time. This blog covers factors to consider while choosing long-term investments so you can identify the right investment options with higher return potential.\u003C/p>\u003Cp>Let us explore the following factors to be considered:\u003C/p>\u003Ch2>\u003Cstrong>Financial Goals\u003C/strong>\u003C/h2>\u003Cp>Defining your financial goals is the foundation for choosing the right long-term investment plan. Decide whether you want to invest for wealth accumulation or save towards children’s higher education expenses. Setting a clear goal and investment objective will help you narrow down choices that perfectly align with your long-term financial goals.\u003C/p>\u003Cp>For example, if your ultimate goal is earning risk-free retirement income, you may choose to invest in National Pension Scheme (NPS) or Public Provident Fund (PPF) over making equity investments. \u003Cbr />People who want to build wealth through market-linked earnings over a period and create a financial cushion for their family can consider investing in our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/golden-jubilee-plan\\\" target=\\\"_blank\\\">Shriram Life Golden Jubilee Plan\u003C/a>. It provides protection and investment benefits in a single plan with various other features like tax benefits, partial withdrawal, easy fund switching, etc\u003C/p>\u003Ch2>\u003Cstrong>Cost of Investment\u003C/strong>\u003C/h2>\u003Cp>It is one of the essential points to consider while choosing long term investments, yet the most overlooked. Investment costs generally include account opening charges, annual maintenance fees, brokerage charges, fund management expenses, etc. High investment costs can erode returns over time if you’re investing in long-term options.\u003C/p>\u003Cp>For example, some mutual funds may have a higher expense ratio than others, resulting in lower returns for investors. So, always calculate your cost of investment and compare similar investment options. This will help you easily identify the best investment options in India for the long term where return on investment (ROI) is attractive.\u003C/p>\u003Ch2>\u003Cstrong>Return on Investment (ROI)\u003C/strong>\u003C/h2>\u003Cp>Everyone prefers investing in high ROI options because they measure the profitability of an investment. Since you’re making long-term investments, focus on earning consistent, inflation-beating returns rather than short-term gains.\u003C/p>\u003Cp>Always compare historical performance if you’re investing in stocks, fixed deposits, mutual funds, or any other long-term investment options. If your primary investment focus is good returns, then high-ROI options like equities may be considered. Traditional plans like PPF provide slightly lower returns but are typically more stable than equities.\u003C/p>\u003Ch2>\u003Cstrong>Liquidity\u003C/strong>\u003C/h2>\u003Cp>Since many people choose long-term investment options for growth, liquidity doesn’t matter to them. However, buying investments with some flexibility is encouraged to counter unexpected financial challenges. For example, if you have PPF investments, you can use its partial withdrawal facility to cover unexpected medical expenses.\u003C/p>\u003Cp>The same may not be possible with Fixed Deposits (FDs) because they may charge penalties for early withdrawal, lowering your funds. Hence, always evaluate the liquidity provisions to pick suitable options.\u003C/p>\u003Ch2>\u003Cstrong>Tax Implication\u003C/strong>\u003C/h2>\u003Cp>The correct investment options typically provide various tax benefits. It can help you reduce your taxes while increasing your earnings. For example, when you invest in options like ELSS mutual funds, PPF, and NPS, you can claim deductions for the contribution amount u/s 80 C while filing the income tax return.\u003Cbr />Certain investment options like ULIPs provide tax-free returns u/s Sec 10(10D) if your premium payments are less than 10% of the policy’s sum assured value. Pick your investments strategically to lower your tax liability and maximize tax-free returns.\u003C/p>\u003Ch2>\u003Cstrong>Risk Tolerance\u003C/strong>\u003C/h2>\u003Cp>You should always invest in options whose risk level aligns with your risk tolerance. Conservative investors who want risk-free returns should explore low-risk options like fixed deposits, annuity plans, or any guaranteed return plans. You can also check our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings plans\u003C/a> to find low-risk options.\u003Cbr />If you have a moderate to high-risk appetite, you can explore high-risk options like ULIPs, EFTs, equity mutual funds, etc. Our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/fortune-builder\\\" target=\\\"_blank\\\">Shriram Life Fortune Builder Plan\u003C/a> is ideal for people with moderate to high-risk profiles. It is a single-premium life insurance plan that provides protection and savings benefits in a single plan. \u003C/p>\u003Cp>Individuals with moderate risk profiles should create a diversified investment portfolio comprising low, medium, and high-risk investments to balance steady growth and high earning potential. All goal-based investments must be made after assessing your risk tolerance. \u003C/p>\u003Ch2>\u003Cstrong>Investment Terms\u003C/strong>\u003C/h2>\u003Cp>It is one of the most crucial factors to consider while choosing long-term investments because it dictates the lock-in periods, exit options, penalties for early withdrawals, cost of investment, and all other investment-related conditions. Not all investment products are designed the same, so always look for options that align with your financial goals, lifestyle, and obligations.\u003C/p>\u003Cp>For example, you may invest in Equity Linked Savings Scheme (ELSS) funds over Public Provident Fund (PPF) because the former has a shorter lock-in period than PPF. It can be beneficial for individuals with kids to meet unexpected education expenses in the short term. Understanding investment terms will help you finalize options that align with your liquidity needs without unwanted constraints.\u003C/p>\u003Ch2>\u003Cstrong>Regulatory and Market Factors\u003C/strong>\u003C/h2>\u003Cp>All investments are governed by specific regulations and market conditions. For example, schemes like National Pension Scheme (NPS) and Public Provident Fund (PPF) are government-backed and strictly regulated, due to which they’re considered relatively secure long-term investment options. \u003C/p>\u003Cp>On the other hand, market-linked investment options such as stocks are affected by economic trends, making them risky for conservative investors. If you want to buy the most rewarding and best investment options in India for the long term, evaluate the governing and regulatory factors before committing. A regulated, transparent plan will minimize risk and ensure accountability, so choose wisely. \u003C/p>\u003Ch2>\u003Cstrong>Types of Investment Options\u003C/strong>\u003C/h2>\u003Cp>Since everyone invests to either grow their income, create safe income streams post-retirement, or build wealth over a period, most investment plans can be categorized into the following three options:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Growth\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Safe\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Income\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">These are generally long-term investment options with a longer lock-in period. They are volatile and don’t allow premature withdrawals.\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">As the name suggests, these options keep the investment safe and help you achieve mid-term financial goals. They generally don’t allow withdrawals in the first few years of investment.\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">It is the best low-risk investment option to convert a lump sum payment into monthly/quarterly/annual income. \u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">ULIPs\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Sovereign Gold Bonds (SGBs)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Infrastructure bonds\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Mutual funds\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Equity stocks\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">PPF\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">NPS\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Equity-linked Saving Scheme(ELSS)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Real Estate Investment Trusts (REITs)\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Exchange Traded Funds (EFTs)\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003Ctd>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Fixed deposits\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Guaranteed savings plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Recurring deposits\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Treasury bills\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Corporate fixed deposits (from top-rated companies)\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003Ctd>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Examples include:\u003C/span>\u003C/p>\u003Cul>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Pension plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Immediate annuity plans\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Post Office Senior Citizens Welfare Fund \u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Dividend-paying stocks\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Non-convertible debenture\u003C/span>\u003C/li>\u003Cli>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Debt mutual funds\u003C/span>\u003C/li>\u003C/ul>\u003Cp>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">And many more.\u003C/span>\u003C/p>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Risk Level of Top Investment Options in India\u003C/strong>\u003C/h2>\u003Cp>The following information can be beneficial if you want to choose the best investment options in India for long term based on your risk profile:\u003C/p>\u003Ctable>\u003Ctbody>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Level of Risk Involved\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Investment Option\u003C/strong>\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">\u003Cstrong>Description of the Investment Option\u003C/strong>\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">ULIPs\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Combines investment in market-linked funds with life insurance coverage\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Bank fixed deposits\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Investments are locked for a fixed tenure, providing assured returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Pension plans\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Long-term investment plans designed to provide regular income post-retirement.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Equity Mutual Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Funds invested primarily in stocks for higher growth potential.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Hedge Funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Actively managed fund that uses pooled investment to maximize returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Corporate bonds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Debt securities issued by companies to raise capital, providing fixed interest payment.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Annuity plans\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Financial product providing regular pay-outs, typically after retirement.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Index funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Mutual funds that replicate the performance of a specific stock market index.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Balanced mutual funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Funds investing in both equities and debt instruments for balanced risk and returns.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Senior Citizen Savings Scheme (SCSS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">A government-backed scheme providing assured returns to senior citizens.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Low\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Post Office Monthly Income Scheme (POMIS)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Investment plan providing fixed monthly income through post offices.\u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">High\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Initial Public Offering (IPO)\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Process of raising capital by companies for the first time in exchange of shares. \u003C/span>\u003C/td>\u003C/tr>\u003Ctr>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Medium\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Debt mutual funds\u003C/span>\u003C/td>\u003Ctd>\u003Cspan lang=\\\"EN-IN\\\" lang=\\\"EN-IN\\\">Funds that invest primarily in fixed-income securities, like bonds and treasury bills.\u003C/span>\u003C/td>\u003C/tr>\u003C/tbody>\u003C/table>\u003Ch2>\u003Cstrong>Conclusion\u003C/strong>\u003C/h2>\u003Cp>Making strategic long-term investments is a great way to systematically build wealth over a period. Whether you want to create a large retirement fund, build your dream house after a few years, make provisions for your children’s higher educational costs or marriage, etc., you can achieve all your goals by choosing the best investment options in India for the long term.\u003C/p>\u003Cp>You can use the factors discussed in this article to choose the right investment options that align with your financial goals. For instance, check our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/growth-plus\\\" target=\\\"_blank\\\">Shriram Life Growth Plus Plan\u003C/a> if you want life cover and savings benefit in a single policy. Those looking to build wealth over time and secure their family’s financial future can consider our \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/wealth-pro\\\" target=\\\"_blank\\\">Shriram Life Wealth Pro Plan\u003C/a>. You can also explore the various \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/child-plan\\\" target=\\\"_blank\\\">Child Plans\u003C/a> and \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/protection-plan\\\" target=\\\"_blank\\\">Protection Plans\u003C/a> at Shriram Life Insurance to diversify your long-term investment portfolio for maximum benefits.\u003C/p>\",\"category\":\"/blog/advice\"},{\"title\":\"Why Millennials love Super Income Plan\",\"heading\":\"Why Millennials love Super Income Plan\",\"short_description\":\"\u003Cp>In an era marked by economic uncertainty and evolving financial landscapes, millennials are increasingly prioritizing financial stability and plann\u003C/p>\",\"tile_image\":[{\"media_img\":{\"url\":\"https://cdn.shriramlife.com/slic-kalam/files/2024-12/10.%20Why%20Millennials%20love%20Super%20Income%20Plan_0.png?VersionId=D_0cCoUxuCHeach1Ds_9hd6cJL9Xqdz2\",\"alt\":\"Why Millennials love Super Income plan?\"},\"media_svg\":null,\"media_svg_alt\":\"\",\"media_document\":null}],\"posted_on\":\"2024-12-26T17:31:40\",\"updated_on\":\"2024-12-26T17:32:03\",\"read_more_title\":\"Know More\",\"slug\":\"/why-millennials-love-super-income-plan\",\"field_bl_tag\":\"\u003Ca href=\\\"/blog/guides/recent\\\" hreflang=\\\"en\\\">Recent\u003C/a>, \u003Ca href=\\\"/blog/guides/advice\\\" hreflang=\\\"en\\\">Advice\u003C/a>, \u003Ca href=\\\"/blog/guides/retirement\\\" hreflang=\\\"en\\\">Retirement\u003C/a>, \u003Ca href=\\\"/blog/guides/savings\\\" hreflang=\\\"en\\\">Savings\u003C/a>, \u003Ca href=\\\"/blog/guides/life-insurance\\\" hreflang=\\\"en\\\">Life Insurance\u003C/a>\",\"description\":\"\u003Cp>In an era marked by economic uncertainty and evolving financial landscapes, millennials are increasingly prioritizing financial stability and planning for the future. Among the array of financial products available, Super Income Plans have emerged as a compelling option for this generation of savers who are seeking to secure their savings and plan for retirement effectively. This blog explores why millennials are gravitating towards Super Income Plans, highlighting their benefits and relevance in today's financial climate.\u003C/p>\u003Ch2>\u003Cstrong>Understanding Shriram Life Super Income Plan: A Secure Path to Savings and Retirement\u003C/strong>\u003C/h2>\u003Cp>Super Income Plans such as the Shriram Life Super Income Plan are structured \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/retirement-plan\\\" target=\\\"_blank\\\">retirement savings insurance plans\u003C/a> designed to provide policyholders with a guaranteed income stream during their retirement years. Unlike traditional savings accounts or investments, which may be subject to market fluctuations, these plans offer stability and predictability in income, making them particularly attractive to millennials who value financial security.\u003C/p>\u003Ch2>\u003Cstrong>Why Millennials Choose Super Income Plans\u003C/strong>\u003C/h2>\u003Ch3>\u003Cstrong>1. Guarantee of Income in Retirement\u003C/strong>\u003C/h3>\u003Cp>Millennials, known for their cautious approach to financial planning, appreciate the certainty offered by Super Income Plans. These plans ensure a regular income stream, either for a fixed term or throughout their lifetime, thereby mitigating the risk of outliving savings. This feature aligns well with millennials' desire for stability amidst economic uncertainties, providing peace of mind that their retirement income is secured regardless of market conditions.\u003C/p>\u003Ch3>\u003Cstrong>2. Long-Term Financial Planning Made Simple\u003C/strong>\u003C/h3>\u003Cp>Planning for retirement can seem daunting, especially for millennials facing competing financial priorities such as student loans, housing costs, and career advancement. Super Income Plans simplify long-term financial planning by offering a structured approach to savings. Millennials can contribute regularly to these plans during their working years, knowing that they are building a reliable source of income for their retirement. This disciplined saving habit resonates with millennials' preference for financial strategies that are straightforward and goal-oriented.\u003C/p>\u003Ch3>\u003Cstrong>3. Customization Options to Fit Individual Needs\u003C/strong>\u003C/h3>\u003Cp>Flexibility is a key selling point of Super Income Plans that appeals to millennials. These plans allow policyholders to customize various parameters, such as the payout frequency and duration, based on their specific financial goals and lifestyle preferences. For millennials balancing diverse financial goals, such as travel aspirations and family planning, the ability to tailor their Super Income Plan ensures that their retirement strategy remains adaptable and aligned with evolving life stages.\u003C/p>\u003Ch3>\u003Cstrong>4. Integration of Insurance Benefits\u003C/strong>\u003C/h3>\u003Cp>Super Income Plans such as the Shriram Life Super Income Plan include savings insurance plans benefits that provide additional layers of financial protection. These may include provisions for disability coverage or death benefits, ensuring that policyholders and their loved ones are safeguarded against unexpected life events. Millennials, recognizing the importance of comprehensive financial planning, value the peace of mind that comes from knowing their Super Income Plan not only secures their retirement but also protects their financial well-being throughout their lives.\u003C/p>\u003Ch3>\u003Cstrong>5. Legacy Planning and Future Security\u003C/strong>\u003C/h3>\u003Cp>While millennials are focused on their own financial futures, they also prioritize leaving a legacy for their loved ones. Super Income Plans support legacy planning by allowing policyholders to designate beneficiaries who will receive the remaining payouts or accumulated funds upon their demise. This aspect of the plan ensures that millennials can pass on financial security to future generations, reinforcing their commitment to long-term financial responsibility and family welfare.\u003C/p>\u003Ch3>\u003Cstrong>6. Diversification of Retirement Assets\u003C/strong>\u003C/h3>\u003Cp>Millennials understand the importance of diversifying their investment portfolio to mitigate risk. Super Income Plans offer a diversified approach to retirement savings by providing a stable income stream alongside traditional investments like stocks and bonds. This diversification strategy appeals to millennials seeking to balance risk and reward while building a resilient retirement fund.\u003C/p>\u003Ch3>\u003Cstrong>7. Inflation Protection\u003C/strong>\u003C/h3>\u003Cp>Many Super Income Plans include provisions for inflation protection, ensuring that the purchasing power of retirement income remains intact over time. Millennials, who are keenly aware of the impact of inflation on their finances, appreciate this feature as it helps maintain the value of their income amidst rising living costs.\u003C/p>\u003Ch3>\u003Cstrong>8. Tax Efficiency\u003C/strong>\u003C/h3>\u003Cp>Super Income Plans often provide tax advantages, such as tax-deferred growth on contributions and potential tax-exempt payouts under certain conditions. Millennials, who are proactive about optimizing their tax liabilities, recognize the benefits of these tax-efficient savings vehicles in enhancing overall retirement readiness.\u003C/p>\u003Cp>By addressing these additional points, millennials can gain a comprehensive understanding of how Super Income Plans such as the Shriram Life Super Income Plan align with their financial goals and aspirations for a secure retirement.\u003C/p>\u003Ch2>\u003Cstrong>Conclusion: \u003C/strong>\u003C/h2>\u003Ch2>\u003Cstrong>Super Income Plans for Millennial Financial Confidence\u003C/strong>\u003C/h2>\u003Cp>In conclusion, Super Income Plans represent more than just a retirement savings tool for millennials- they embody a strategic approach to financial security and future planning. By offering guaranteed income, customization options, and integrated \u003Ca href=\\\"https://www.shriramlife.com/life-insurance/savings-plan\\\" target=\\\"_blank\\\">savings insurance plans\u003C/a> benefits, these plans empower millennials to build a robust financial foundation while preparing for retirement with confidence.\u003C/p>\u003Cp>Whether you're a millennial navigating the complexities of financial planning or an individual looking to secure your retirement, exploring the benefits of Super Income Plans can provide clarity and assurance in achieving your financial goals. Embrace the certainty and flexibility of Super Income Plans today to pave the way for a financially secure tomorrow.\u003C/p>\u003Cp>Understanding the nuances of Super Income Plans and how they align with millennials' financial aspirations underscores their relevance in today's dynamic economic landscape. By harnessing the benefits of these plans, millennials can forge a path towards financial independence and retirement readiness, ensuring a future filled with stability, security, and prosperity.\u003Cbr /> 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