Why It Is Preferred to Buy Term Insurance Over Other Investment Options?
There are several investment schemes in the market that assure a promising financial future for your family. Some schemes may offer valuable returns, while others help you save for long-term needs. But, still many people prefer investing in a term policy. Read on to know the reasons.
It is impossible to predict what life holds for you in the future. And, to ensure the financial safety of your family even in your absence, you may invest in various schemes and build a corpus that the family can use. Amongst the host of other investment options and life insurance policies available in the market, one of the most preferred choice of investments is term insurance policy.
A term insurance policy is the most basic form of life insurance plan that is cost-effective, and easy to buy. It protects the family’s financial future by offering death benefits equal to the sum assured of the family in the event of the policyholder’s unfortunate and untimely death within the policy period.
If you are wondering why term insurance policy is the most preferred investment option, here are a few important reasons:
Term insurance policy is known to offer the highest coverage amount amongst all other types of insurance plans and a nominal cost. The term insurance has the most affordable premium. Since it is a pure protection plan, and offers no ancillary benefits, it has the lower premium.
One of the significant reasons why term insurance policy is immensely popular is that the premium is decided based on your age and the policy term. So, if you buy a policy at a young age, you can buy a term plan with a higher coverage at a lower price. Also, because of the low premium many people who have just started their career or have moderate income buy this policy to protect their family.
Most insurance companies in India give the policy buyers the flexibility to choose the policy term. Based on the age at which you buy the policy and your premium paying capacity, you can choose a term insurance cover for as low as 10 years. Also, most of the insurance companies in India allow you to change the policy period at any time within the term. So, even if you have opted for a short-term plan initially, you can extend the coverage period later and provide maximum coverage to your beloved family.
There are some term insurance policies that assure protection for up to 75 years. Such long-term policies are highly beneficial if you don’t have any other investment in retirement schemes. The death benefit from term insurance can help your family secure their retirement.
Once the premium amount is fixed at the time of buying the policy, it remains unchanged throughout the policy term. Thus, when you buy early, you get the benefit of lower premium without any possibility of increasing premium in the future.
Another significant benefit of buying a term plan, which makes in a preferred investment over other options is that it allows you to increase the scope of coverage by purchasing add-ons. These are additional coverage options that cover specific risks like critical illness, accidental death. Etc. You can get additional protection at a nominal premium.
A term insurance policy is one of the few investment options that is eligible for tax benefit. The premium you pay towards the policy is considered deductible under Section 80C of the Indian Income Tax Act. The maximum tax benefit you can get is Rs. 1.5 lakhs in a financial year.
Thus, with so many advantages it is no surprise why it is the most preferred investment option.