Is investing in Term Insurance an Appropriate Decision?
When it comes to Financial Future Planning, life insurance plays a crucial role in our life. Especially if you are the sole bread earner in your family, then it becomes even more critical for you to invest in Life Insurance. So, that even in your absence, your family doesn’t have to suffer from financial problems.
Now the question arises, for which life insurance you should go for? There are plenty of life insurance policies available in the market these days with attractive benefits. And when you start comparing, you tend to get confused. Therefore, let us compare various Life Insurance Plans, which are quite popular these days.
|Type of Life Insurances and Factors||Premium Amount||Death Benefit||Tax Benefit||Return on Investment (ROI)|
|Term Life Insurance||Lowest||Yes||Yes||No|
|Whole Life Plan||High||Yes||Yes||Yes|
Above matrix clearly shows that Term Life Insurance is the best affordable plan, which gives similar benefits in relatively low premiums. Here are its other features and benefits in detail to provide you with more clarity on the same:
- Premium Amount: Needless to say, that Term Insurance policy is the most affordable insurance plan, as compared to other life insurance policies present in the market. It is an ideal option whether you are in the initial stage of your career, you are an entrepreneur who is running a start-up, or you are the only earning member in your family. Basically, everyone with a limited income can opt for Term Insurance. You can also add riders with your term life insurance and make it more valuable with a little extra cost.
- Death Benefit: There will be similar death benefits in Term Life Insurance or any other life insurance; the only difference will be of premium.
- Low-cost premiums: In the Term Insurance policy, you are required to pay the lowest premiums as compared to other policies.
- Tax Benefit: There are myths that Term Insurance plan premium doesn’t get covered under tax benefit, which is entirely incorrect. Almost every life insurance premium gives you tax benefit under section 80C of the Income Tax Act. Tax exemptions do not depend on the amount of premium; hence the premiums of term life insurances are eligible for tax deductions up to Rs 1.5 lacs. Moreover, the insured sum amount, which is given to the family of the policyholder after his/her demise is also tax-free under section 10(10D) of the income tax act 1961.
- Return on Investment (ROI): Return on investment is the only point where Term Life Insurance is lacking, and it is because of the structure of this life insurance plan. Term Insurance sheerly gives your family financial security after your demise. It doesn’t offer any maturity benefit; thus, it isn’t an investment product. And hence, its premiums are comparatively low as compare to the other life insurance policies. On the other hand, if we talk about ROI in Whole Life Plan or Endowment plan or ULIP, none of them are a good source of investment because the return on investment is quite low there. However, if your whole sole purpose is to invest, then you should go for other available options like mutual funds, equity, shares, property or gold.
- Time Span: Apart from “Whole Life Plan” every other policy gives you coverage as per the chosen term that starts from 1 year and can go up till 30 years. Whole Life Plan covers you for the rest of your life, it doesn’t have any specific term, and you don’t have to worry about the renewal of your life policy. But there’s one drawback, i.e., it makes the premium value quite expensive. On the contrary, Term Life Insurance premiums are affordable, and you can select term up till 30 years, which is a long-time span.
This is the comparison of Term Insurance policy with some popular plans available in the market. Now, let us have a look at its other additional benefits:
- Simple Yet Flexible: Term Insurance plan is the simplest form of life insurance available. You just need to select the term, coverage amount and the frequency of premium payment, and that’s it. There is no investment factor in it; that’s why its calculation is easy and simple. You can also customise your term plan as per your requirement. For instance, you can renew it, convert it to other plans and add riders by paying some minimal charges along with your policy premium.
- Affordable with Best Benefits: The premiums if Term Insurance plans are extremely affordable as compared to other policies. They are designed in such a way that you can make out the best from your hard-earned money. But it gives a similar death benefit as you receive in any other policy. Term Insurance Plan is best suitable for people with a limited source of income.
After examining every aspect, the logical conclusion is that if you are looking for a life insurance plan with minimum expenditure and high benefits, then Term Life Insurance is the best option for you. To get customised quotes on term life insurance, you can visit BimaKaro.in and buy the right term insurance policy today and make your family’s financial future safe and secure.