Do you want to invest a part of your salary in financial instruments? However, before that, have you considered investing in term insurance plans? If no, then you should seriously give it a thought.
A term insurance plan lays the foundation of any successful investment portfolio. Many young professionals refrain from investing in life insurance, as they have little or no responsibility on their shoulders. If you are one of them, then you are making a big mistake. There are numerous advantages of investing in term plans from an early phase of life. These include:
- Straightforward insurance policy
Term plans are easy-to-understand. They are a simple type of life insurance plan, as they purely provide life protection for a specific duration at an affordable premium. As there is no investment component involved in a term plan, it becomes easier for you to understand its terms and conditions. A term insurance plan secures your family’s financial future against the uncertainties of life. In the case of an untoward incident during the policy tenure, the insurer is liable to pay the death benefit (sum assured) to your family members. Here, there are no maturity benefits unless you have purchased term insurance with a return of premium (TROP). Another plus point of a term plan is that one can buy it at the young age of 18, and the maximum age limit is 65.
- Economical premium
A term plan comes at a pocket-friendly cost. When compared to any other type of insurance policy, the term insurance premium is the lowest. Besides this, when you invest in a term plan at a younger age, you get it at a nominal rate viz-a-viz an older policyholder. It is because during this phase of life you are healthy, and the risk of mortality is significantly low. Also, there is a lower probability of having life-threatening diseases like diabetes, high blood pressure, and cardiovascular diseases. Additionally, the term plan’s premium remains the same throughout the period of the policy. So, if you start at an early age, you can save a large sum on the premium in the long run.
- Tax exemptions
The term insurance tax benefit is another reason why you should invest in it. Here, you can get a deduction of up to INR 1.5 lakh per annum for the premium you pay towards your term plan under Section 80C of the Income Tax Act, 1961. So, you must invest in a policy when you are young to avail of this term insurance tax benefit for a longer duration. Moreover, the sum assured that your family members receive in case of an unfortunate event is tax-free as per Section 10(10D) of the Act.
- Availability of riders
Term plans offer various riders like critical illness cover, accidental death benefit, income rider, the waiver of premium, and permanent disability, among others to widen the scope of your coverage. Though you have to pay supplementary charges for these riders, they are worth every penny. Therefore, it becomes crucial to opt for riders that can meet your needs.
Today, it is quite convenient to buy a term plan. You can purchase it online from the comfort of your home. By opting for this mode, you end up paying a much cheaper premium compared to buying a policy through an agent. This is because the insurer eliminates the agent’s commission and passes on this benefit to you in the form of a discounted premium. If you are looking for an ideal term plan, you can take the assistance of an online term insurance calculator. It enables you to compare the premiums of various plans based on the factors like your age, tenure, and the sum assured.
Now that you have understood the importance of having a term plan, invest in it without any further delay. By making this decision, you will ensure that your family has a large sum assured when you are not there to take care of them.
