An insurance policy can help you save tax. Knowing this an individual lands up buying insurance policies for only the tax benefits. But there is more to it than just the tax benefit. An insurance policy is mainly designed to cover the financial loss in case of the death of the policyholder and to insure your life. In case you are availing of a policy make sure you do it for the right reasons. One should first check your needs and all the plans available in the market before buying a policy.



Following is a nutshell of the policies available.

Traditional Pension Plan

This plan aims at giving you the funds when you do not get your regular income. This plan gives guaranteed returns. Here the company invests on your behalf in market linked funds which is either debt , equity or both. There are also unit linked pension plans , depending on what your requirements are.

Moneyback

It is a plan where you get funds back at various intervals during the policy term. Besides that also at the end of the policy you get the maturity benefits as well. But this policy is more on the expensive side and does add much value.

Term Plan

A term plan is a pure insurance policy without any investment benefit added to it. So if you looking only for an insurance cover then term plan is what you should avail of. It is a plan which gives you a high cover for a low premium amount. The plan is designed in such a way that incase of any unfortunate situation the policyholder's dependents get the sum a assured and are financially secured. But if the policyholder survives through the duration of the policy term he does not get any benefits. You have various payment options like monthly, half-yearly, yearly or single. In single premium paying option you can pay at one stroke fro your policy cover.

It is advisable to take a term policy early in life as you get a high cover for a low premium.

Unit linked insurance plans

These plans Invest your money in the market linked funds and hence builds a corpus for you for the future. A ULIP is designed to give you twin benefits of investments and an insurance cover. But you need to be invested in these plans for a longer duration to get good returns. Here the policyholder gets to choose which kind of funds he would like to invest in depending on his risk appetite. Also in the event of death of the policyholder the dependents get the benefits. If you are looking for both investment and insurance benefits then this is the right plan for you.

So, one can have all of the above policies but you need to decide what are your requirements invest in the plan most suited to you. You should always have a mix of various plans like life, health and retirement.