Insurance has been defined as form of transferring risk associated with a particular asset to another party, usually an insurer, in exchange for a premium which is determined by an 'Insurance rate' or 'Mortality rate' in the case of 'Life Insurance' which is a factor that reflects the amount of risk involved and hence be able to compensate for loss of a person's life for his family or the nominee of the life insurance policy.

Earlier the purest form of life insurance policy was introduced wherein the policy used to have characteristics of a non-life policy - The insured pays premiums for  a certain amount of life cover, an amount of money his family or the nominees of the policy would receive if something drastic were to happen to the insured. However, it seemed hollow and very altruistic for someone to keep paying money only to see that it never even benefits them directly, ever. Hence, these policies were not really that popular. Life Insurance companies had thought of innovative products since then and you would find a plethora of polices that cater all kinds of clients looking for different options including the options to combine investments with a life cover.

The latest trend to hit the developing markets especially, thanks to their bullish stock markets are the ULIPS ( Unit-Linked Insurance Policies) which provide a life cover and also allow the insured to invest in the stock markets indirectly by employing a competent fund manager who would try to ensure better returns over the benchmark returns in that particular stock market. This is made possible by shaving off a part of the premium as a cost for taking up the life cover, a part of the premium for the insurer's expenses and then using the rest of the premium paid for investing into the markets which is done entirely on the investor's choice with respect to his age, risk appetite and the amount he chose to invest.

ULIPS have been compared with mutual funds over the time and both have their own apparent advantages and disadvantages. With an investment point of view, ULIPS will prove to be more expensive than the mutual funds due to the long duration of investment horizon and the life cover that ought to be taken care of. Life insurance policies have evolved over the years and we now have a range of policies catering to all kinds of customers. However, in most countries, a single insurance policy offers a lot of benefits like long term savings options, life cover, tax benefits while paying premiums and even taking the money out because it would be withdrawn entirely tax free. Life insurance policies can be used for long term investing which would be useful for life planning like wanting to purchase property, for child's education and marriage and a lot more. The policies have a partial withdrawal facility and a transparent charges structure that ensures you have tremendous flexibility and you really know what you are paying for.