When it comes to investing in the markets, certain investors hold certain beliefs that largely influence their investment decisions. SIP or systematic investment plans are not immune to this practice as well.
Several investors, especially new investors hold certain beliefs towards SIP investments that may not be always true. In this blog, we will try to bust a few SIP mutual fund myths for you, so that you can make an informed investment decision.
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Common Myths Of SIPs
Following are some of the SIP myths that are prevalent among novice investors:
Stopping SIP investments during a market correction
Several investors commit the mistake of pausing, or worse, stopping their SIP investments as soon as the stock markets correct. However, this is actually completely opposite of what an investor is expected to do during a market correction.
Why? Let’s understand. SIP investments help to average out the cost of investment through a concept known as rupee cost averaging. Falling markets may be an opportune time to invest more due to the low prices.
SIP is an investment product
Another common blunder committed by investors is that they assume that SIP is an investment product in itself. However, it is merely a way of investment or an investment facility that allows individuals to invest in mutual funds in a systematic manner.
So, you do not invest in SIP. Instead, you invest in the markets through SIP mode of investment.
One must invest through SIP only in equity funds
Another common myth that must be busted is the delusion an investor lives in – invest via SIP investment mode only in equity mutual funds. However, they cannot be more wrong. An investor can invest in both debt funds and equity funds through SIP mutual funds.
If you wish to achieve a short-term investment goal in planned manner, SIP in debt funds makes sense.
SIP mutual funds ensure promising returns
Nobody would say no to promising high returns on their investments. Several investors live in the dark that investing in mutual funds through SIP mode of investments eliminates the risk of investments and hence promises assured returns to investors.
However, they cannot be more wrong. Though, SIP investments tend to work in the favour of investors when invested for a prolonged duration, investments in mutual funds are market-linked. This means that one cannot expect assured returns on SIP
investments.
Heavy penalty is charged when you discontinue your SIP investments
Unlike popular belief, an investor is not levied heavy penalties in case they miss their SIP investments or default on their SIP instalments.
However, one must be careful that if they miss 3 successive SIP investments, the fund house might cancel your SIP investments. What’s more, the bank might charge some penalty in such cases.
Conclusion
Now that we have helped you provide a clear picture of SIP investments, hope that it will help you make the right decision. You can always avail of the services of a financial advisor if you are stuck at any investment step. Happy investing!
Investors new to the investing world often build a perception towards SIP mutual funds that it is ideal only for equity investments. However, they cannot be more wrong. SIP or systematic investment plan can prove to be beneficial for debt funds as well.
In this blog, we will understand how SIP in debt mutual funds can turn to be valuable to investors. Let’s begin by quickly recalling what SIP investment is.
What is an SIP?
SIP is an investment tool offered to investors that allows them to invest in mutual funds in a systematic and disciplined manner. Under the SIP mode of investment, an investor allocates a predetermined sum of money towards their desired mutual fund schemes at regular intervals for a defined period.
SIP investments are quite flexible in nature – an investor has the liberty to choose the investment amount, investment date, periodicity of intervals, investment duration, type of investment, type of SIP, etc. What’s more – anyone can invest in SIP mutual funds as the minimum investment amount to invest in mutual funds through SIP is just Rs 100 per month.
SIP in debt mutual funds
Investors aware with the workings of SIP investments are well-versed with the fact that in order for their assets to grow in value, their SIP investments have to be exposed to some level of volatility. Different types of mutual funds have different levels of volatility linked to them.
The NAV or net asset value of debt mutual funds often witness a stable rise in their prices over time. This is truer for debt funds that have a short investment duration or Macaulay’s duration. This is why conservative investors with a low-risk appetite often consider this investment option to ensure that their investment portfolio is not exposed to high levels of risk.
Conservative investors looking to invest in relatively safer investment option can consider investing in debt funds through SIP mode of investment. Another reason why an investor may prefer debt funds over equity mutual funds is that it is easier to predict returns on your investments on these safe investment avenues. This will help individuals to plan their investments in a better way.
An investor can also consider using an SIP calculator to understand the future returns on their investments.
How can SIP investment in debt funds be beneficial for investors?
Debt mutual funds can be an ideal investment option for investors with a low risk profile and low investment horizon of say 1 to 3 years. Several investors also consider allocating their assets to debt funds to help them balance their long-term debt allocation in their investment portfolio.
Investors with a short-term investment horizon looking to invest in debt funds might consider to first evaluate their investment needs and determine the right investment amount required to reach their financial goals.
As mentioned above, this can easily be achieved through SIP return calculator. All one needs to do is enter certain investment details such as investment duration, desired investment corpus to achieve a particular financial goal, and the estimated average returns on their debt funds.
Finally click on enter. An voila, the calculator will do all the complex calculations for you and provide you with the minimum investment amount you must invest to reach a particular corpus in the desired duration. Happy investing!
A ULIP plan is an insurance plan with an investment element that helps you build up a corpus for your future. A ULIP policy can be used for a number of reasons ranging from travel, retirement, home renovation or purchase, child’s higher education, marriage, and more. This is one of the reasons why ULIP insurance is considered apt for goal-based investments.
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Not only does it offer features that help multiply your money, but it also offers additional advantages, such as ULIP taxation benefits, life cover and financial protection to your loved ones, among other things.
Thanks to the many types of ULIP plans available in the market, ULIPs are one of the best options for goal-oriented people. Here’s how:
It offers flexible investment options
The latest ULIP options in the market offer many flexible features that can suit any risk appetite and align to any and every kind of goal. ULIP plans these days offer a wide variety of funds like equity, debt, and balanced funds. So, you can buy a ULIP plan and invest as per your unique goals in life.
For instance, if you are saving for your child’s higher education and have a large time horizon, you can invest in equity funds. Such long-term investments will distribute the risks, and equity funds will offer you higher returns.
ULIP plans also allow you to switch from one fund to another. So, if you start the policy by investing in equity funds and later on, move to debt or balanced funds if you want. Moreover, you can do so free of cost. Every goal requires a unique investment strategy; a ULIP policy offers this benefit with a variety of fund options.
It helps you save systematically
ULIP insurance plans inculcate the habit of periodic savings that is essential for goal-based investment. A ULIP allows you to pay the premiums in monthly, yearly, or half-yearly instalments. This lets you save for a future need at a pace that you are comfortable with, without having to compromise with your present needs and expenses.
Moreover, ULIP taxation benefits allow you to reduce your tax output and save more. The premiums paid towards a ULIP plan are tax-deductible under Section 80C of the Income Tax Act, 1961. The money you save in tax can be further contributed to your goal.
The maturity benefits also offer tax benefits under Section 10(10D) of the Act, subject to specific conditions and limits.
It offers high returns
As stated above, a ULIP scheme can offer you varied options for investment, such as equity, debt, and balanced funds. Based on your goals and investment capacity, you can select a fund of your choice and earn suitable ULIP returns.
For instance, equity funds can offer high returns at high risk. Debt funds can offer low risk and comparatively lower returns. Lastly, balanced funds can offer moderate risk and moderate returns.
Investing in a combination of these funds, depending on your financial goal, can help you grow the value of your investment fund over the policy term and beat inflation.
It eliminates the need for debt
A ULIP plan is an excellent way to grow your money and cater to different goals. It helps you streamline your money for a future goal, so you do not feel the need to take on debt to fulfil your needs.
It also instils financial discipline as you invest your money towards a future goal instead of spending on unnecessary items.
It covers short term and long-term goals
A ULIP policy can be used for short term as well as long term needs. ULIP plans have a lock-in period of only five years, post which you can withdraw your funds. This makes it easy to use a ULIP for a wide range of goals.
For instance, if you are saving for a relaxed retired life, you can choose a ULIP plan with a long policy term of 25 years. However, if you are saving for a child’s marriage or higher education expenses, you can invest for a shorter term of 10 to 15 years.
What is the best ULIP to buy?
The best ULIP to buy would depend on your requirements and investment strategy. However, generally speaking, the following aspects can help you pick out a suitable plan:
Pick a plan with flexible features: A flexible plan can help you alter your investment strategy as per your goal. For instance, if you are saving for retirement, you can start by investing in equity funds and slowly move to debt funds as your retirement age nears. Look for a ULIP that allows you to switch from one fund to another without any additional costs.
Look for a plan that offers additions: Additions help you grow your fund’s value and maximise your savings. Some insurance companies offer loyalty, maturity, and booster additions throughout the policy term that help boost your earnings.
Opt for a credible ULIP provider: Investments always carry some amount of risk. Hence, it is important to invest in a ULIP plan offered by a trustworthy insurance company. This will ensure that you have a good customer experience. Even in the future, it will enable a hassle-free claim settlement.
To sum it up
ULIP plans are ideal for goal-oriented people as they enable disciplined savings and offer optimal returns. These plans can help you reduce your tax output, eliminate the need for debt, save for a wide range of needs, and secure your loved ones’ future in your absence.
They are multipurpose plans that can be altered to your preferred risk and investment strategy. So, no matter the goal you are saving for, make sure to add a ULIP plan to your investment portfolio soon enough. You can check out the ULIP plans of Edelweiss Tokio Life Insurance and start goal-based investing for short term as well as long term needs.
To enable better financial wellbeing in the future, Unit Linked Insurance Plan (ULIP) is among the most popular investments in India. This is because a ULIP plan helps you achieve your long-term financial goals. A ULIP policy combines insurance along with investment.
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However, several factors need to be considered before you buy a ULIP. These include your investment risk appetite, ULIP fund management charges, premium payment options, duration of investment, and flexibility of the ULIP policy.
Before you look for a ULIP to buy, it is important to understand the concept of ULIP.
What is ULIP?
A ULIP policy is an investment tool where the policyholder can get the benefit of insurance as part of an investment policy. ULIP insurance aims to provide wealth creation along with a life cover. The concept of ULIP is that the insurance company puts a portion of your investment towards life insurance and the rest into a fund that is based on equity, or debt, or hybrid as the case may be.
Your investments are looked after by fund managers for which you incur ULIP fund management charges that, as per the IRDAI regulations, cannot exceed 1.5%. Amongst the most important features of ULIP are the tax benefits it provides, which we will unravel in detail.
Before you invest in top-rated ULIP plans, it is important to be aware of the three major types of ULIPs:
Equity Funds: Such ULIPs invest most of their funds in equity and equity-based assets such as stocks of different companies.
Debt Funds: The premiums for this ULIP plan are invested debt or money market instruments, government bonds, securities, and likewise.
Balanced Funds: Premiums here are invested in a combination of equity and debt market instruments.
You can seamlessly switch your ULIP plans/funds based on your financial goals and risk appetite.
Additionally, some insurers have introduced newer ULIP plans with minimal charges and unique features. The features of ULIP for these new-age plans include removal of return on mortality charges, on maturity, as well as premium allocation charges.
This category seeks to remove the negative bias against ULIPs and increase awareness towards modified customer-centric changes. Greater awareness about existing policies will help you buy a suitable ULIP for yourself. To know which ULIP to buy, it is important to be aware of crucial factors such as insurance objectives and investment goals and compare ULIP policies.
How does a ULIP Policy work?
To find an apt ULIP in India, you must first know how they work to help you achieve your financial goals. When an individual invests in a ULIP plan, they need to pay a fixed premium for the selected cover amount. The insurer pools money from all the policyholders and invests them based on the funds that they chose.
The total corpus from the invested money is divided into ‘Units,’ each with its specific face value. At any point in time, the value of each unit is termed as the Net Asset Value (NAV). As the value of underlying assets increase or decrease, its effect is reflected in the NAV. Fund managers manage the investment based on the fund type and investment preferences.
It is important to note that as per the IRDAI, the lock-in period for ULIPs is 5 years, and its performance or ability to generate returns is linked to the markets. In keeping with the terms and conditions of the ULIP insurance, if an individual partially withdraws from the corpus, the corresponding number of units is sold. They are also levied with some policy changes in the form of units.
Tax Benefits of Buying ULIP
Aside from the insurance and investment benefits, ULIPs also offer income tax exemption for a maximum of Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961. While investors can choose to invest a higher amount, the tax deduction that they can claim is limited to Rs. 1.5 lakhs.
However, if the ULIP is discontinued before two years, the policyholder cannot avail of the tax benefits under Section 80C. You can use a ULIP calculator to see how much premium is required for your plan, as well as for checking the ULIP returns.
Apart from this, the death benefit payable to the nominee is completely exempt from taxation under Section 10(10D) of the Indian Income Tax Act.
Budget 2021 Taxation Changes: ULIP Capital Gains Tax on Maturity Pay-out
Additionally, it is important to note that the Finance Bill 2021 has proposed certain revisions for the tax deductions and exemptions for ULIPs:
As proposed by the Finance Minister, policies bought on or after 1st February 2021 where the unit premium paid is more than Rs. 250,000 would attract ULIP capital gains tax. ULIPs will be considered a ‘capital asset’ with the gains or losses chargeable to income-tax under the head ‘capital gains’ in the year of receipt.
For premiums below Rs. 250,000, the said budget proposes an exemption restricted to aggregate policies whose combined premium is up to Rs. 250,000
For policies purchased before 1st April 2012, the premium to sum assured should not exceed 20% for the proceeds to be tax-free.
Simply put, the maturity benefit is taxable as Long-Term Capital Gains (LTCG) if the total annual premium paid exceeds Rs. 2.50 lakhs. If the annual premium is below Rs. 2.50 lakhs, then the maturity pay-outs are exempt from taxation under Section 10 (10D).
While the revision might sound discouraging, if policyholders are investing within Rs. 250,000 annual premium limit, the gain in terms of tax-saving remains highly attractive.
Additionally, ULIPs still remain an attractive investment solution in comparison to its direct competitor, the Equity Mutual Funds. With ULIPs, you get life cover, and the premium paid, and death benefits are exempt from taxes. This makes ULIPs a viable investment avenue despite the taxation changes.
An ideal ULIP plan in India is flexible to changing financial needs and grows with you. It is also an affordable policy that offers life insurance for family protection, saves and invests for future goals, and provides tax benefits.
Conclusion
A ULIP is a powerful financial product that enables you to secure the financial future of your family while adding to your wealth through investments. However, to buy a ULIP that suits your needs, it is important to analyse your risk appetite and take investment decisions accordingly.
Edelweiss Tokio Life Insurance offers Wealth Secure Plus that offers a perfect savings solution to save for the crucial stages of your life, such as children’s education, their marriage, your retirement, and so much more.
Some critical features of the plan include full life cover up to 100 years of age, small monthly premiums to start, attractive boosters and additional pay-outs, and long-term plus short-term plan offerings. More importantly, we offer unlimited fund changes with all our ULIP plans, understanding the fact that your goals and risk appetite might change.
It is often believed that the first step for efficient financial planning relies on the ability to save. Considering this, individuals often strive to discover ways in which they can reduce their tax liability. Purchasing suitable life insurance is one of the popular and risk-free ways to save taxes. A Term plan is among the easiest tax-saving instrument to understand.
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Although a term life insurance policy is valuable for tax-saving, it is important to analyse different options to identify which one is the best term life insurance for you. The Indian Income Tax Act allows for numerous deductions and exemptions on the purchase of term insurance policy. However, a crucial element of efficient tax-saving is not making last-minute investments as policyholders often tend to miscalculate their insurance needs.
Take time to explore from among the best term insurance in India to find one that suits your financial and family needs.
What is Term Life Insurance Policy?
Before we enlist the tax-saving benefits of a term insurance policy, it is important to understand what exactly a term plan is. Term life insurance policy provides financial coverage for a specified “term” of years. If the policyholder were to die while the policy is active, a pre-determined death benefit is paid out to the nominee. Owing to a reasonable premium, term insurance is significantly less expensive as compared to investment or savings-based life insurance.
Tax Benefits of Life Insurance Term Plan
There are several tax benefits that policyholders can avail with the purchase of a life insurance term plan. Both the premiums paid as well as the death benefits are exempted from taxes under the Indian Income Tax Act. Following are the benefits that policyholders can claim during the financial year:
Term Insurance Tax Benefits under Section 80(C) on Term Plan Premiums
According to Section 80(C) of the Indian Income Tax Act, 1961, a taxpayer is eligible for tax exemptions on the term plan premiums paid. The policyholder can claim a tax benefit for up to Rs. 1.5 lakhs every financial year.
However, there are certain clauses for deductions that insurers need to be aware of:
If the term life insurance policy is issued on or after April 1, 2012, then tax deduction benefit is limited to 10% of the sum assured.
If the term life insurance policy is issued on or before March 31, 2012, then tax deduction benefit is limited to 20% of the sum assured.
In the event of disability, the tax benefit is increased by 15% of the sum assured if a policy has been issued on or after April 1, 2013.
If the insurer voluntarily surrenders the term insurance policy within two years, no tax benefit is provided.
Term Insurance Tax Benefits under Section 80(D) on the Term Plan Premiums
This Section primarily allows for tax deductions on health insurance premiums. You can avail of a tax benefit under Section 80(D) if you have opted for health riders such as Critical Illness Rider, Surgical Care Rider, Hospital Care Rider, etc. By including these riders in the existing policy, insurers can maximise their tax benefit while also getting health insurance cover.
The clauses for deduction include:
Tax benefit can be availed for not more than ? Rs. 25,000 if the policyholder is under 60 years of age.
A higher benefit of ?50,000 can be availed by a policyholder above the age of 60.
Term Insurance Tax Benefits under Section 10(10D) on Term Plan Payout
The tax benefits of the term plan are not limited to the premiums paid but also the life cover payouts under Section 10(10D) of the Income Tax Act. The death benefit provided to the beneficiaries is entirely exempted from taxes.
Here are some clauses to remember:
If the policy premium exceeds 20% of the actual sum assured, then the maturity amount is taxable. However, this is unlikely to happen as the sum assured is usually higher than the premium.
If a handicapped dependent predeceases the member paying for his medical treatment and maintenance, then such amounts will be treated as income and taxed accordingly.
Important Considerations to Purchase the Best Term Life Insurance
As term insurance is an income replacement in the absence of the bread-winner, it is important to carefully read the conditions of the term policy prior to purchase. Here are some things you must ask yourself for choosing the best term insurance in India:
When to Buy: Marriage or family planning are not the only reasons to buy term life insurance. It is important for anyone who has financial dependents. There is even a provision for buying term insurance for housewife wherein a husband can purchase one for his spouse. Edelweiss Tokio life insurance plan comes with a Better Half Benefit, wherein you can include your spouse in your policy and assure an additional life cover for your spouse when you are no longer around.
The Cover Needed: There are several free tools available on the internet that help insurers calculate the right insurance cover based on their income and expenses. Edelweiss Tokio Life Insurance also offers a free term insurance premium calculator on their website to help you determine your term plan needs. Ideally, individuals should buy a life cover equal to at least 8-10 times the annual income.
Insurance Rider: Accidents or disabilities might impact the earning capacity of the policyholder. Riders like Accidental Death and Disability Benefit strengthen a term insurance policy by providing multiple additional benefits, over and above the base sum assured.
Tenure: Insurers need to identify the right tenure of the life insurance term plan. A shorter tenure will lead to you being under-insured. However, a term plan coverage for a longer duration than needed will result in unnecessary term plan premium outflow. Determine the term plan duration based on the age by which most of your liabilities will be done, and you will have no need for income replacement-based insurance plans.
Type of Plan: There are various facilities available under different term insurance plans in India. Insurers should review their needs every five years and make changes to their existing plan accordingly.
The best term plan is one that combines the aforementioned factors to suit the needs of the insurer.
‘Zindagi Unlimited’ with Edelweiss Tokio Zindagi Plus
The Edelweiss Tokio term plan – Zindagi Plus is carefully curated to protect the financial future of your family and offers a customisable life cover with COVID-19 death claims. Conscious of the uncertainties of life, the Edelweiss Tokio Life Insurance Zindagi Plus plan offers an additional premium waiver on 35 critical illnesses and offers a non-medical underwriting option on life cover up to ?99,99,000.
Conclusion
Term insurance is the most seamless and affordable way of ensuring optimum financial protection for your family in your absence. Along with the extensive life cover, it also offers attractive tax benefits. However, make sure to go through the prevailing tax norms and understand if they apply to your policy before buying term insurance plans in India.
The global COVID-19 pandemic is one of the biggest crises the world has ever witnessed. During the pandemic, even the mightiest of the economies suffered huge losses, several businesses shut down, and millions of people lost their jobs or received a pay cut.
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On the other hand, medical expenses continued to rise significantly. This has made one thing clear – you need to adopt a fail-proof financial planning process to ensure you survive such a crisis effectively.
One of the most important elements of the financial planning process is to create a supplementary income plan. Having a secondary income source can help you manage your expenses during financially crunched situations, such as job loss, significant salary cut, business loss, etc. The best way to secure an alternative source of income is by investing in a regular income plan.
Here is everything you need to know about the importance of a supplementary income plan with insurance in a post-pandemic world:
What is a regular income plan with insurance?
A regular income plan, also known as an online income builder plan, is a special type of insurance policy that gives you comprehensive insurance cover along with a regular income source.
This means that in case of your unfortunate demise during the policy tenure, the regular income plan will pay a defined lumpsum amount, in the form of a death benefit, to your family.
Apart from this, the plan gives you an option to receive your returns in the form of regular monthly income payouts during the course of the policy to supplement your primary income source.
What is the role of a regular income plan with life insurance in a post-pandemic world?
The COVID-19 pandemic has been raging on since 2020, leading to a rise in medical expenses and a loss of income for millions of people in India. The pandemic has redefined the need of financial security, and it is wiser for you to upgrade your financial planning process to include more up-to-date options like a regular income plan with life insurance.
Traditional insurance policies have always been an important part of a financial plan. However, the global pandemic has made the importance of insurance coverage even more pronounced. Especially, life insurance that also acts as a secondary source of income is ideal for dealing with the financial instability in and post the COVID-19 era.
Here are some of the top benefits of a regular income plan:
1. Protection: Coronavirus has caused millions of deaths, leaving several families financially struggling to keep up their standard of living after the loss of their primary breadwinner. However, with a regular income plan that also offers insurance protection, you can be at peace of mind, knowing that in case of an unfortunate event, your loved ones will not be financially strained.
The life cover payouts offered by the insurance policy will help them fulfil their living expenses and maintain their standard of living. Moreover, they could use the funds to achieve their financial goals, such as funding the education of your child, sponsoring the marriage of your children and more. Your family can also use the money to pay off any outstanding debts.
2. Supplementary income source: Apart from causing a health scare, the COVID-19 pandemic has also led to a loss of livelihood for many. In such a scenario, having an alternate source of income always helps. With the regular income plan, you can opt to receive your insurance returns in the form of a lump sum or as regular payouts according to a frequency of your choice.
This helps you ensure that the pandemic does not financially crush you. In case you lose your job or experience a pay cut, you can use the regular income payouts to pay for your child’s education, meet healthcare expenses, pay your loan instalments, cover your everyday living expenses and do much more.
3. Tax benefits: Apart from securing your family in your absence and helping you cope with the financial difficulties through a reliable income stream, a regular income plan also gives you tax benefits. The premiums you pay for the regular income plan are exempt from taxes under Section 80C. Moreover, the death benefit received by the family is also exempt from taxes under Section 10(10D).
Additionally, the regular income payouts that the plan offers also enjoy tax exemption under Section 10(10D). This helps you reduce your taxable income and ultimately your tax liability, enabling you to have more disposable income at hand.
Apart from offering these major benefits, you can also enhance the insurance coverage of your regular income insurance plan. Typically, these plans allow you to opt for riders, such as critical illness benefit, accidental total and permanent disability rider, income benefit rider, waiver of premium rider and more.
When you opt for a rider, such as a critical illness rider, you create a failproof financial plan for uncertainties like the COVID-19 pandemic. Such riders give you a lump sum benefit if you are diagnosed with a listed critical illness and also waive any further premiums. Moreover, the regular income stream helps your family cover their expenses while you are recovering from your illness.
Edelweiss Tokio Life Insurance Income Builder Plan
Trust Edelweiss Tokio Life online income builder plan to help you create a financial safety net for your future. The income builder plan offers comprehensive insurance along with an option to create a reliable supplementary income stream for uncertain times.
The plan comes with affordable premiums, competitive features, utmost flexibility, tax benefits and a wide variety of riders, enabling you to create a strong financial shield for the post-pandemic world.
Conclusion
The global pandemic is a wake-up call for everyone to realise the importance of financial planning. Choose the best regular income plan that can provide you with the much-needed supplementary income as well as a secure insurance cover for your family.
It is wiser to be prepared for all types of uncertainties in the post-pandemic world, with Edelweiss Tokio Life – Income Builder.
Several investors live in the dark that SIP and mutual funds are quite replaceable. What they fail to realise is that Systematic Investment Plan, commonly known as SIP is barely a method available to investors that helps them to invest in mutual funds. However, did you know that there’s one more way through which you can invest your money in mutual fund investments?
Yes, you heard us right. There are two ways to invest in mutual funds – either through regular and disciplined mode of investment through SIP or one-time investment through lumpsum investment.
Though there is loads of information about SIP investment on the net, not much is covered about the lumpsum mode of investment. One such important yet often overlooked piece of information is determining the right time to make a lumpsum investment in mutual funds. Don’t worry, we have got you covered. In this article, we will understand the right time to invest a lumpsum in mutual funds. But, first let’s quickly recall what lumpsum investment is.
What is a lumpsum investment?
Under lumpsum mode of investment, an investor delegates a substantial amount of money towards mutual fund investments at a time.
This mode of investment is suitable for investors who have a sudden and substantial influx of cash in their bank account or have a huge amount of idle cash lying around. The influx of cash could be in the form of anything – sale of assets, money received after retirement, winning a lottery, tax refunds, court settlements, gift, inheritance, or literally anything else.
When is the correct time to make a lumpsum?
If you are looking to make an investment in equities, lumpsum mode of investment might not be the suitable way of investing for you. This is because experts believe that with equity investments, it is better to stagger your investments – as in the case of SIP investment. When an investor invests a lumpsum in mutual funds, they expose their portfolio to certain uncertainties and volatilities associated with the stock markets.
There’s one important parameter when it comes to investing in mutual funds through lumpsum mode of investment – timing the markets. During this time, an investor’s main goal should be safeguarding their capital. The lumpsum mode of investment is believed to offer best results when the stock markets are on a rise. Also, you might consider investing in debt funds when you wish to make a lumpsum investment. If you wish to evaluate the future value of your lumpsum investments, you might want to use a lumpsum calculator.
As you might know, there are certain risks associated with investing a lumpsum in mutual funds. If you do not wish to expose your investment portfolio to these risks, you might consider delegating your risk through STPs – systematic transfer plan. STPs help investors to systematically transfer their funds in a disciplined way from one asset class to another.
Life is uncertain, and while it is not possible to prepare for all the unexpected events ahead, it is feasible to create a financial safety net. Our latest term insurance product – Edelweiss Tokio Life Total Protect Plus can be a part of efficient financial planning.
When you invest in a term plan, you are at peace knowing that in case of your unfortunate death, your loved ones will be financially secure. But when you buy an online term insurance plan, you must compare term insurance plans before making the final decision.
Know how you can provide total financial protection to your family with the Edelweiss Tokio term life insurance:
What is the Edelweiss Tokio Total Protect Plus plan?
The latest term plan, Edelweiss Tokio Total Protect Plus, offers an assured sum in case of your unfortunate death during the policy tenure. The plan offers whole life cover of up to 100 years of age. This term insurance is a protection plan that offers a predetermined sum assured to your family in case of your death, along with other optional benefits.
The plan is not affected by the movements in the market, which makes it an ideal choice for you to create an infallible financial plan for your family.
The sum received from our all-new term plan can help your loved ones navigate the financial struggles of their life when you are not around. They can use the money to pay for their everyday expenses and maintain their standard of living. Moreover, the term insurance benefits also help them achieve their financial goals, such as higher education for your children, buying a home, and so on.
Edelweiss Tokio Total Protect Plus is an all-inclusive term insurance policy, where you get comprehensive protection for you and your family under a single plan. It offers financial coverage for the spouse as well as the child. Additionally, you can get life cover for up to 100 years of age, thus ensuring long-term security. Finally, with the choice of 5optional riders, you can enhance your policy coverage to the next level!
Here are a few reasons why you should choose this online term insurance plan.
Financial protection with life cover: As a primary breadwinner of the family, your family is financially dependent on you. In case of your unfortunate demise, your loved one might be left to struggle financially. However, when you invest in the Edelweiss term plan, you can be assured of the financial security of your loved ones even in your absence. The term life plan pays out a defined sum to your nominee, in case of your demise during the term insurance tenure.
Coverage up to 100 years of age: With this plan, you can choose a whole life cover to ensure extensive protection for you and your loved ones. Most liabilities of individuals are over by the time they retire, and their children become independent. However, with a whole life cover, you can ensure a sizeable financial inheritance to your family in case of your demise.
Optional benefits to enhance coverage: The Edelweiss Tokio term plan allows you to improve your term plan coverage by opting for additional features such as Child’s Future Protect Benefit and Better Half Benefit.
Child’s Future Protect Benefit: You can opt for this optional feature if you have a child between the age of 0 and 18 years. This benefit offers an additional sum assured to the child, which can be 10% to 100% over and above the base sum assured, for securing their growing years. The additional sum will be paid if the life assured passes away within the tenure of the Child’s Future Benefit option, which can be either the selected period or till the child turns 25 years of age, whichever is earlier.
Better Half Benefit: You can cover your spouse in the same plan through the Better Half Benefit option. The benefit of this policy will come into force only after your demise. In such a scenario, the base sum assured will be paid to the spouse covered under the policy. Additionally, life cover will commence on the spouse without any liability to pay future premiums. The Better Half Benefit Sum Assured is 50% of the base sum assured, which will be payable on demise of the spouse.
Attractive discounts on premium: Apart from being a term plan with affordable premiums, the Edelweiss Tokio Life – Total Protect Plus policy also reduces your premiums by offering you discounts. You get 6% discount on your first-year premium if medical tests are completed within 7 days from the date of purchase or login. Additionally, female policyholders get discounts on their term plan premiums. All policyholders can get discounts on the total premiums if they opt for a high sum assured. Economical premiums and discounts make it easier to buy comprehensive coverage for your family, enabling them to stay secure even in your absence.
Riders to enhance protection: You can further enhance the coverage of the policy by choosing from a list of five (5) unique riders:
Edelweiss Tokio Life Waiver of Premium Rider: This waives off all future premiums if the life assured is diagnosed with any one of the listed critical illnesses or has met any accident or permanent disability.
Edelweiss Tokio Life Accidental Death Benefit Rider: This rider offers additional sum assured to the nominee if the life assured’s demise is due to an accident.
Edelweiss Tokio Life Accidental Total and Permanent Disability Rider: This rider pays a lump sum amount if the life assured gets into an accident and suffers total and permanent disability.
Edelweiss Tokio Life Critical Illness Rider: If the life assured is diagnosed with any one of the 12 listed critical illnesses, this rider will pay out a pre-specified lump sum amount.
Edelweiss Tokio Life Hospital Cash Benefit Rider: With this rider, get monetary allowance on hospitalisation and a lump sum amount as a recuperating benefit post discharge.
Tax benefits: The premiums you pay for the Edelweiss Tokio Life Total Protect Plus policy are covered under Section 80(C). Further, the death benefit received by your nominee also benefits against taxes under Section 10(10D) of the Income Tax Act, 1961.
Free look period: We offer transparent guidelines and a free look period wherein you can cancel the term life insurance within 15 days from the receipt of the policy documents. For electronic policies and term plans obtained through distance mode, you can cancel the policy within 30 days.
When you buy a term insurance plan you are essentially buying your peace of mind. The Edelweiss term insurance plan, Total Protect Plus, assures you that your loved ones will be financially protected even if you are no longer around.
