3 Replies to “where the insurance companies are investing the amount paid by us?”

  1. Insurance companies diversify the total amount in various schemes like Equity,debts,liquid funds and so on to hedge against risks and to get good returns over a period of time.ULIP means Unit linked Insurance Plan.Its a plan in which your amount is invested in share markets by the fund managers.So they are giving you returns more than Bank FDs + they are giving you insurance protection + you get income tax waiver on the invested amount.If you yourself wanna participate in share market then no insurance cover and no income tax freedom will be enjoyed.Even you run a risk of loosing your capital as fund managers have more knowledge and capabilities than us (the general public).

  2. In case of term and endowment insurance (traditional insurance) the money is invested in government bonds, treasury bills, infrastructure schemes of state and central government. A very small portion is invested in corporate bonds of good companies and smaller portion in capital market.

    In case of ULIP they are market linked products as such major part (as deviced in the scheme even upto 100%) in invested in capital markets.

    In case of ULIP the risk of capital market fluctuations the risk is borne by the investor.

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