MUMBAI: When it comes to investing, urban India, although getting savvier, is still playing it safe. Gone are the times when insurance and investments were considered mutually exclusive.

As per the Boston Analytics Indian Consumers' Savings and Investment Behavior Report for November 2009, the popularity of life insurance companies which promise higher returns on maturity is growing as urban Indians prefer life insurance instruments which provide an assured sum on or sometimes before maturity.

These policies, also known as Unit Linked Insurance Plans (ULIPs) also offer tax deductions under the Income Tax Act and hence any investments in such instruments is tax free up to Rs 1,00,000.

According to the report, 60% of the 10,000 respondents surveyed in 15 Indian cities, admitted to having at least one insurance policy; whereas 65% said they had an ULIP as compared to a simple term plan where there are no assured returns and the insured money is only paid in case of death of the policy holder. The preference towards ULIPs turned out to be higher among consumers in the Tier II and III cities.

The report further revealed that Kolkata and Mumbai have the largest of consumers who had their life insured. 85% respondents in Kolkata and 84% in Mumbai report having purchased life insurance.