Insurance plan

Here’s why term insurance is a smart investment

Investing in a term insurance plan is one of the most important ways a policyholder can choose to secure their future and that of those who depend on it. Investments and insurance plans can be tedious and financially stressful to maintain in their own way, in times of inflation and recurring increases in lifestyle costs; premiums for this may be ill-suited to a person’s insurance needs or income capabilities.

Therefore, the most imperative step is to create a smart investment solution that enables an insured to meet their financial goals and coverage needs. A term insurance plan can be a useful method of securing these solutions. Let us understand the fundamentals and features of a term insurance plan.

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So what is term insurance? Well, a term life insurance policy is designed to effectively cover the needs of the insured and their dependents with an insured death benefit in the event of the death of the policyholder. A basic term insurance plan in India is considered one of the most affordable ways to secure one’s future when premiums are low and one can customize their coverage, add riders and choose payment models in according to his needs.

A term insurance plan is also an asset, which can help to obtain or repay long-term loans, even in the absence of the main breadwinner. It is a resource to be used when unavoidable financial expenses must be borne by the surviving beneficiaries in the absence of the policyholder.

Find the perfect term insurance

Finding a term insurance plan that can meet their investment needs is a requirement that many investors are actively seeking today. This is a bonus in many ways as an insured can benefit from their insurance coverage, benefits while acquiring some money from the plan. While term plans are primarily intended for the beneficiaries of the insured to receive an assured sum upon their death, a provision for the return of premiums can also be invoked.

Since standard term insurance policies do not provide any maturity benefit if the insured outlives the term of the policy, one can opt for a term plan which has the option of refunding the full amount of the premium invested. by the insured at the end of the term if he survives.

The return of premium, when combined with the benefits of a maturity benefit, makes the insurance policy a large and smart return on investment that is comprehensive with all insurance coverages. The life cover that protects the insured for the duration of the policy and the monetary benefit they receive at the end of the policy become an end-to-end solution to an investor’s financial needs.

Therefore, one should consciously consider a term insurance plan when looking for returns on investment, as it can help with financial planning and coverage for a person’s foreseeable future.

Term Insurance Plan Features

Now that the investment-oriented benefits of a term insurance plan have been established, let’s take a closer look at the key features of a term insurance policy.

  1. Low premiums: There is a range of insurance plans that provide coverage and future benefits to policyholders of all kinds. However, the more complex a plan, the higher the premiums. Therefore, those who are just starting out in their professional career, with limited financial and insurance agency knowledge, may choose to opt for a term insurance plan as their first investment.

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It is a simple instrument whose premiums can go down to Rs 600 per month and which is accessible to people of all income brackets.

  1. Death benefit: This is the amount of payment promised to the beneficiary of the contract in the event of the death of the insured. This amount is generally a financial resource allowing the beneficiary to maintain its financial obligations after a disruption in the structure of its income.
  2. Rider Benefits: You can add income, waiver premiums, disability, accidental death or even critical illness riders to your existing term insurance plan. The cost of these riders is added to the cost of the base premium; therefore, one must choose after proper deliberation.
  3. Fiscal advantages: Premiums paid for a term insurance plan and the payment sum so received therefrom at maturity are exempt from tax under Sections 80C and 10(10D) of the Income Tax Act from 1961.
  4. Value released: The total amount that is paid to the insured or his beneficiary at maturity is limited to the paid-up value. The paid-up value corresponds to the calculated premiums paid by the policyholder compared to the premiums stipulated to be paid by the insured at the time of purchase of the policy.
  5. Redemption value: The surrender value is the amount to be paid by the insurer to the insured in the event that the latter decides to terminate the value before maturity.

The pursuit of identifying the best term insurance plan and researching its investment bonuses can be completed by assessing its needs against the features and benefits offered by it. In order to further explore the term insurance options with refund of premium available, one can take a look at the plans offered by Max Life Insurance which offer a mix of these benefits along with attentive advice from their knowledgeable financial advisers.

(Devdiscourse journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse claims no responsibility for them.)