Remember these points before investing in insurance plan

As 2017 nears the end, most of us will be planning to park our investments in some schemes to save taxes. If you are looking for investing in insurance plans which guarantees exemption, it would be wise to study other options too prior to taking a decision.

According to BankBazaar, if you have a surplus fund, you can divide it into term insurance and other investment avenues. Here's a list of details to remember.

Start with a term plan

If you are opting insurance for the first time, then term plans come best for you.

In term plans, you get coverage for a definite period of time and if the policyholder expires during that time period, the beneficiary or nominee as stated in the document will get the full sum assured.

They also have low premium, and by buying a term insurance plan, customers are also able to get good tax benefits.

Under section 80C of the Income Tax Act, 1961,  a term insurance policyholder can avail tax deductions of up to Rs 1.5 lakhs.

Return-oriented insurance plans

If an insurance policy is already existing under your name by your parents, you can avail for an investment-linked insurance plan that promises you good returns in the future.

Generally, it comes as an endowment plan available in the market as ULIPs or pension plans.

There are lock-in period for most endowment plans, which can vary between 10 to 40 years.

Bank Bazaar states that it is advisable to check death benefits in such schemes. This is necessary especially if the lock-in period is long and you suspect that you may not survive till then.

Such scheme is considered best for people under higher tax brackets. They can opt for these plans on an annual premium basis and get maximum benefits.

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