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How do we counter the perception that HNIs invest in term and Mutual funds?

  11/13/17 9:33 AM

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HNIs or high net-worth individuals are only different from us because of their potential to invest more money in financial products. They are able to invest in term and mutual funds, among other financial products. Being prone to same risks as any other individual, they also need a life insurance policy as a perfect investment product for themselves and their families. As the future is uncertain, there is no way to predict how much money will be needed and at what point in time to spend on life in the future and maintain the same standard of living as you do now.

There is a common conception that people with high net worth choose to invest in a term plan for life protection and mutual funds for building wealth over time. This has led people to perceive that they should also invest in a term plan and a mutual fund to financially secure their future.

This perception about the term and mutual funds has proved wrong as far as people with high net-worth are concerned. This is because of an insurance cum investment product called Unit linked investment plan or ULIPs.

Certain reasons have made ULIP a perfect investment product for HNIs:

Dual benefits ULIP as opposed to investing in term and mutual funds

Why would anyone buy two separate schemes when you can have the benefits of both in one? A Unit linked investment plan provides dual benefits of both investment and life insurance in just one plan. A specific portion of the premium is invested in funds of your choice, and you earn a return on your investment along with a death benefit if an unfortunate event occurs.

People with high net-worth have replaced their investment in term insurance and mutual funds with the benefits of ULIPs. It is fairly simple and flexible, and they don’t have to think about maintaining two separate plans.

Long-term financial goals with ULIPs as opposed to investing in term insurance and mutual funds

High net-worth individuals don’t have to worry about the short-term financial goals as they have a regular source of income which is quite enough to sustain them. But what about long-term financial goals? Given the uncertainty in life, there is a fair chance that a person with high net-worth can meet with an unfortunate event and die. Will the current net worth be enough to let his/her family maintain the same standard of living and spend for the things they will need all their life?

While it is true that a term insurance plan can provide lump sum money that can help for some time, but what will happen to the mutual funds? This is the reason why HNIs are looking to achieve their long-term financial goals by investing in ULIPs rather than in a mutual fund.

To achieve your financial goals efficiently, you have to counter the perception that HNIs only invest in term and mutual funds. Head over to Edelweiss Tokio Life’s website to know more about ULIPs and buy a ULIP for you and your family and save tax under section 80C and 10(10D).

It is true that a normal citizen cannot spend as much as an HNI can, but they sure can choose to invest like one.

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