There are several life insurance products available in markets like:
- Term Plan
- Unit Linked Plans (ULIPs)
- Non - ULIPs - Traditional Plans
If you are looking for protection plan/insurance please buy term insurance. It is going to be cheapest among other categories of insurance plans.
If you are looking for investment along with insurance and also would like to save tax, you can buy term plan and invest rest of the amount into Public Provident Fund, Tax Savings Fixed Deposits, ELSS Mutual funds etc.
The overall return that one can get by opting above option as well as the sum insurance is of much bigger amount than that of in investment cum insurance policies.
Here is the example of some non-ULIP plan available in market:
Age of person: 25 Years
Insurance Term: 20 Years
Option 1: Buys insurance policy for tax savings and investment.
Sum assured: Rs. 2,50,000/-
Annual Premium: Rs. 25000/-
Total Premium: Rs. 5,00,000/-
Total Cash back and Maturity amount: 8,00,000/- (approx.)
This sounds good, right? As person is getting Rs. 3,00,000 as return..!!!
Option 2: Buys Term plan and invests into PPF
Sum Assured: Rs. 10,00,000/-
Annual Premium: Rs. 3000/- (approx.)
Rest amount: (25000-3000) Rs. 22000 intested for 20 yrs in PPF (assumed PPF is renewed for another 5 year term)
Total PPF amount available at end of 20 yrs with average 8% annual rate of interest (Current PPF Int. rate is 8.8%), Rs. 10,50,000/-
And also person is getting higher sum amount of Rs. 10 lacs.
And instead of PPF if person invests in some balanced manner wherein average return is approx. 10%, available fund at end of 20 years will be around Rs. 14 lacs.
You can search on google / other websites and confirm the working of above all options.
I request do not buy expensive insurance policy just to save income tax and without looking for other available options.