Discover 7 Types of Short-Term Savings Insurance Plans

Introduction

At times, you need something lighter on your wallet when working around with your investments. More so, when your earnings are not as high, or you are bound with other several commitments. In such circumstances, choosing a short-term investment plan can fetch you reasonable returns without stocking up your capital for a longer time. 

An investment plan that includes an insurance component fulfills such criteria. It is one of the most lucrative options you can consider if you want to invest lighter with good returns.

On this note, let us discuss 7 types of short-term savings insurance plans to choose from:

1. Term life insurance with an investment component

You can choose a term life insurance that comes to you with an add-on to grow your investment portfolio too. Here, you must have a tie-up with an insurance provider that allows you to keep paying your subscription premium amounts toward life insurance plans. 

Out of the entire premium amount collected, a set portion of the income goes for the life insurance coverage over a pre-determined number of years while a remaining portion of the premium money can be set aside for an investment option. 

You get insurance coverage while growing your investment portfolio too. 

2. Unit-linked insurance plans

These are insurance plans that combine insurance coverage with investments. While a portion of the premium goes towards insurance, the remaining portion of your subscription amount is invested via different channels of investing like equities, bonds, real estate, etc. 

These are short-term savings plan that combines insurance with higher-return-based investment options. The unit-linked insurance plans usually come with shorter tenor periods like say 5 years or so.

However, some insurance providers can allow earlier withdrawals too. This is a low investment risk guaranteed return policy and yet another good option for you to choose from.

3. Fixed deposits with insurance

You can opt for a short-term investment plan that combines insurance with fixed deposits. These are issued by banks wherein your fixed deposits comprise insurance coverage. This way, you convert your investment portfolio into a coverage plan that secures your life. 

The rate of returns is guaranteed while you get lifetime insurance coverage. These are fixed deposits that combine insurance coverage and the plan is suitable for retirees, pensioners, or senior citizens as they do not want to risk their capital investment while still aiming to receive a life insurance cover that takes care of their medical expenses too. 

Therefore, this is a term investment for traditional investors who are risk averse yet want to take an investment option that provides more out of the offing. 

4. Endowment plans

Endowment plans are insurance plans that offer a lump sum after a specified tenor or upon the death of the primary policyholder, whichever happens, earlier.

These are medium-term investment options wherein you can withdraw a portion of your money after a minimum lock-in period. 

While there are insurance service providers that allow you to apply for a 60% loan on the total assurance money. You can get the loan amount and the remaining sum shall go to your account or your authorized nominee’s account. 

While endowment plans are usually medium-term to long-term, you can also find insurance companies that offer you with short tenor investment plans. 

5. Mutual funds with insurance benefits

You can look for mutual funds with insurance benefits. This way, you can look for lucrative rates of return and grow compatible investment portfolios. At the same time, you can avail a host of insurance benefits via the scheme.

You can look for short-term or long-term investment plans on mutual funds that offer guaranteed rates of returns. As insurance riders are included via this versatile plan, you can provide life insurance coverage for yourself and your family members. 

You need to get in touch with an insurance provider that offers you customized investment-based solutions so that you land on a lucrative and income-generating scheme like this. 

6. Health insurance with investment features

Some policies combine health insurance with insurance savings with returns of investment that can be configured in a hybrid investment-cum insurance plan. 

In this customized investment solution, you can combine health benefits in terms of availing cashless hospitalization or reclaiming the amount spent on medical bills as this is a comprehensive health insurance policy that you are looking at. 

With savings or interest components, you can also allow your investment portfolio to grow. Therefore, choosing a health insurance investment plan can combine the features of an insurance and a short-term investment plan. 

7. Employee’s Provident fund with life insurance coverage

The Employee’s Provident fund is a specific sum of money the employer deducts from the employee’s salary account. An equal contribution of the amount i.e. EPF is done by the employer himself. This is a benefit the employee accrues with a health insurance cover.

There are affiliated hospitals that provide treatments entirely free of cost for the member and the family members if they are covered by an Employee Provident fund. 

In developing economies wherein hospitalization expenses can otherwise cost you a bomb, this is a lucrative investment cum insurance benefit working employees can utilize for themselves and their family members too. You also get a lumpsum post-retirement that doubles as a lucrative investment option.

Why do you need a savings plan?

You need a solid foundation to build your future. Therefore, building a reliable and robust savings cum investment plan seems the dire need of the hour indeed. 

By building an investment portfolio via an insurance policy term, you do not solely benefit but also help your family members achieve their dreams or aspirations. It can be allowing your children to get enrolled in a prestigious world-renowned university or helping your parents achieve their dream vacation.

Otherwise, it can be for building your brand new home. These are long-term dreams that cannot be achieved without a savings or investment plan you have in place.

Therefore, you need a solid investment cum savings plan to not just save for a rainy day but build a prosperous and sustainable future too. 

What is the importance of availing a comprehensive insurance plan?

There are quite a lot of lucrative benefits when you avail yourself of a comprehensive insurance plan. Helping you with pointers covering the same:

1. Provides coverage for the entire family

When you invest in a comprehensive insurance plan, you just do not save yourself but you provide coverage for your entire family members. 

For instance, if you avail of a health insurance plan, you can add your family members as nominees in lieu of the same. This way, you and your family members can benefit through cashless hospitalization and cover various other pre and post-hospitalization benefits the coverage plan has in store for you. 

2. Sustainability

You provide a sustainable degree of protection by covering long-term expenses via well-charted insurance plans. It can be an endowment plan you take to help your daughter study abroad. Or, it can be automobile insurance to take care of accidents and cover maintenance expenses of your cars or limousines. Else, it can be a health cover for your family members. Therefore, by choosing a wise insurance plan, you promote sustainability for decades to come. 

3. Freedom from constant worries or tension

When you invest in comprehensive insurance plans you free yourself from about of constant worries or tensions on what life is going to throw at you. For instance, if you have a medical emergency on hand and you already have signed up for a comprehensive health cover and a fire accident at your premises, you already have a fire policy that you had signed up for. This way, your what-ifs are covered paving the way for a life filled with joy and thereby achieving financial freedom. 

Suggested Reads: Max Life Guaranteed Savings Plans

How do you pick up an investment cum insurance plan?

Here is how you pick an investment cum insurance plan. Helping you through with a run-down of pointers connected with the same:

1. Shopping around

You can do some bit of shopping around via online websites. Or, you can walk down to retail offices that sell you a whole range of investment products. You must do this exercise as you must stay connected with what different investment plans are and how you add an insurance component to them. Only when you talk to qualified insurance or financial advisors, will you have an idea of how products work and whether you choose the best out of the lot.

2. Getting a word-of-mouth
   

You can have a friendly chat with your business colleagues or friends who have taken up insurance cum investing plans as a part of their portfolios. When your friends or colleagues suggest insurance plans they may have taken up, then you can be confident to go for the same.

The Bottom Line

Insurance is a vast ocean and several risk factors are associated with different types of insurance plans. You must understand the pros and cons of different insurance plans and gauge risk factors connected with plans before signing in on the dotted lines. 

When you look for the right type of investments and pave the way for a robust type of financial planning, you can secure a bright and prosperous future and seek financial freedom for decades to come. 

Frequently Asked Questions