We live in a world that is constantly evolving with advancements aiming to simplify lifestyles and enhance outcomes. The fintech industry is booming globally at an unprecedented pace. Investors in 2023 seek alternative investment options than conventional equity and debt instruments to beat the increased volatility, growth slowdown, rising inflation, and predictions of the financial crisis, etc. of the traditional equity and debt markets they are so used to.
There are multiple alternative investment options in India. Some of the most popular alternative investments include private equity, hedge funds, real estate, cryptocurrencies, pre-owned policy investments, etc.
Pre-Owned Policy or life settlement is a high-return alternative investment that is becoming popular among Indian investors after success in the US markets.
What is a Pre-Owned Policy (POP) Investment?
A pre-owned policy investment allows investors to pay premiums for an insurance policy that is owned by other individuals. The investor becomes a beneficiary of the insurance policy and receives the benefit or maturity amount depending on the terms of the policy. POP investment is a futuristic investment product that is new in the Indian market compared to other alternative investments in India.
Why is Pre-Owned Policy (POP) Investment Gaining Popularity Among Alternative Investments?
There are multiple benefits of investing in a pre-owned policy for investors, policyholders, as well as insurance companies. This creates a win-win situation for all parties involved.
- Policyholders can transfer their policies to meet their financial obligations, need emergency funds or unable to pay their premium.
- Investors can get better returns than traditional financial instruments like equity and debt instruments at lower risk.
- Since there are various policyholders in the market, the investor can choose to invest in the policy of preferred investment and maturity tenure. The premiums will depend accordingly.
- The volatility in the market does not affect the insurance policy returns. Thus, the investor enjoys reduced market risk.
- The investor has the option to surrender the pre-owned insurance policy to the insurance company.
- Investment in Pre-owned policies can be a lump sum or regular payments.
- The returns earned through POP investments are tax-free for traditional insurance policies.
- Pre-owned policy investment offers the best risk-to-reward ratio.
- These investments are useful for diversification in the portfolio as the returns do not depend on volatility in the market.
Safe Investments with High Returns 2023
Every investor prefers to invest in an instrument that provides better returns at lower risk. The following table compares some of the most popular alternative investments in India in 2023 with low risk.
Summing up
Among all the alternative investment options with low risk in India, POP investments offer the least volatile returns with low risk. The return-generating capability of POP investment is similar to equity while the risk factor is similar to government securities.
Investors must acknowledge the fact that each financial instrument carries a different risk-to-reward ratio. Apart from return and risk, factors like liquidity, flexibility, affordability, and safety must be considered while making an investment decision.
Every alternative investment in India has its pros and cons. However, modern Insurtech products like pre-owned policy investments can suit the investment required for a majority of investors in India.
