Here's Why Term Insurance Plan Makes for A Smart Investment

Investing in a term insurance plan is one of the most important ways in which a policyholder may choose to secure their future and along with those dependent on them. Investments and insurance plans can be tedious and financially stressful to maintain in their own ways, at times of inflation and recurrent increases in lifestyle costs; the premiums towards the same can be ill-matched to a person’s insurance requirements or income capabilities.

Therefore, the most imperative step is to build a smart investment solution that enables a policyholder to achieve their financial goals and coverage needs. A term insurance plan can be a useful method to secure 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 made to effectively cover the needs of the insured and their dependents through an assured death benefit sum in the event of the policyholder’s demise. A basic term insurance plan in India is considered to be one of the most affordable means of securing one’s future where premiums are low and one can customise their coverage, add riders and choose payout patterns according to their needs.

A term insurance plan is an asset as well, which can help one to secure or pay off loans in the long run, even in the absence of the primary income earner. It is a resource to be used at times when unavoidable financial expenses have to be met by the surviving beneficiaries in the absence of the policyholder.

Finding The Ideal Term Insurance

To find a term insurance plan that is able to fulfil one’s investment needs is a requirement many investors actively seek today. It is a bonus in many ways, as a policyholder is able to avail their insurance coverage, benefits while also acquiring a monetary sum from the plan. While term plans are mostly directed towards the beneficiaries of the insured to receive an assured sum on their demise, a provision for the return of premiums can also be availed.

Since standard term insurance policies do not provide any maturity benefits in the event the insured survives the policy tenure, one can go for a term plan that has the option of returning a policyholder’s invested total premium amount at the end of the term if they survive.

The Return of Premium when coupled with the benefits of a maturity benefit causes the insurance policy to become a sizeable and smart investment return which is complete with all insurance coverage. The life cover which protects the insured during the policy tenure, and the monetary benefit they receive at the end of it become an end-to-end solution to an investor’s financial needs.

Therefore, one should consciously take a term insurance plan into consideration when they seek investment returns as well, as it can aid financial planning and coverage for a person’s foreseeable future.

Features of Term Insurance Plan

Now that the investment-oriented perks of a term insurance plan have been established let us look closer into the salient features of a term insurance policy.

1. Low Premiums: There is a range of insurance plans that offer coverage and future benefits to policyholders of all kinds. However, the more complex a plan is, the higher the premiums for them are. Hence, those who are starting out in their professional careers, with limited financial agency and insurance knowledge can choose to go for a term insurance plan as their first investment.

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It is a simple instrument that has premiums that can go as low as Rs 600 a month, and are accessible to people from all income brackets.

2. Death Benefit: It is the promised payout amount promised to the beneficiary of the policy in the event of the insured person’s passing. This amount is usually a financial resource for the beneficiary to maintain their financial obligations after a disturbance in the income patterns.
3. Rider Benefits: One can add riders for Income, Waived Premiums, Disability, Accidental Death or even Critical Illness in their existing term insurance plan. The cost of these riders added to the basal premium cost; hence one should choose after adequate deliberation.
4. Tax Benefits: The premiums paid for a term insurance plan and the payout sum thus received from the same at the time of maturity is exempted from taxation under Section 80C and 10(10D) of the Income Tax Act, 1961.
5. Paid-up Value: The total sum that is paid to the insured or their beneficiary on maturity is limited to the paid-up value. The paid-up value is the calculated premiums paid by the policyholder against the stipulated premiums to be paid by the insured at the time of the purchase of the policy.
6. Surrender Value: Surrender value is the amount to be paid by the insurance provider to the insured in the event the latter decides to terminate the value before maturity.

The pursuit of identifying the best term insurance plan and finding its investment bonuses can be completed by weighing one’s needs against the features and benefits offered by the same. In order to further explore options term insurance options with the return of premium available, one can check plans offered by Max Life Insurance which offer a blend of these benefits along with close guidance by their adept financial advisors.

(Devdiscourse's 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 does not claim any responsibility for the same.)