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Investment in Unit Linked Insurance Plans in India INSURANCE PRODUCTS WITH INVESTMENT OPTIONS IN INDIA About Insurance Products: Insurance Products may be mainly classified as (I) Traditional Products: These are just like fixed Insurance & Income products, I.e., whatever you need to invest and the returns you would receive are predetermined / fixed. At maturity (end of the policy period) you will receive the specified maturity amount. In case of any unfortunate happening during the period of the Policy, your family (nominated person/s) will receive the 'Sum Assured' (Insured Amount), and the policy will be terminated. These products invest into very low risk investments throughout their term (They should do so and have to confirm the Govt. and Insurance Regulatory and Development Authority rules). The point here is these products are sufficient only for the predefined Insurance needs range only. The returns on these products cannot meet the future requirements of the returns to meet the inflation. (ii) Unit Linked Products: These products are just like mutual funds and carry investments into a broad spectrum of investments ranging from 'High' to 'Medium' to 'Low' risks (Funds). These Funds are managed by high profile, expert organisations called 'Fund Managers'. The investments made into these products are invested as to meet your Insurance and a major portion is invested for your Investment needs. Of course, obviously there will be some charges for fund allocation and fund management which are quite negligible when compared to the returns and mainly the insurance cover. WHY EITHER MUTUAL FUNDS OR UNIT LINKED INSURANCE PLANS?: The answer lies in the financial view of 'RETURNS FROM INVESTMENTS'. The only investments whose returns get along proportionately enough with the ever growing inflation rate are Real Property and then it's 'EQUITY'. Yes, you can invest in real property. But, then the investment risk needs to be diversified, I.e., investing in various assets and they also need to respond to your various types of needs currently and in the future. WHY 'UNIT LINKED INSURANCE PLANS'? WHY NOT MUTUAL FUNDS?: Certainly one should invest into mutual funds as they help to diversify the investment risk. Currently in India they are very interesting as Govt. has restricted the levy of entry fees.