Investment is a good thing because making your money work with a productive investment strategy is the foundation for generating long-term wealth. But coming up with a productive and reliable investment strategy and portfolio can seem challenging and complex. It needs a lot of research, a thorough understanding of financial products, and perseverance to come up with a strategy or build a portfolio that meets your short-term and long-term needs.
An ideal portfolio should have the right mix of different financial products that help you grow your wealth at a reasonable rate, minimize risk, and help secure your future, among other benefits.When it comes to securing your future and that of your family’s, financial products such as stocks or mutual funds or retirement funds are one way to go. However, these require individuals to remain invested in the products for a substantial period to see a favourable outcome.
Insurance products,on the other hand, offer life cover as well as investment returns under a fixed term. Amongst the different insurance options available today in the market, term life insurance is one of the best.
What is term insurance?
Term insurance is life insurance which ensures the safety and security of your family when you are not around anymore. Created specifically to cover for the risk of death, it helps you prepare and secure your family financially for an unforeseen and unfortunate event.
Here are a few reasons to include term insurance in your financial portfolio.
- High coverage at low cost: Term insurance allows you to have the highest death benefit or life cover at an affordable premium. As this investment tool covers only life and not the investment, the premium rates are very economical when compared to other plans. For instance, one can buy term insurance with a risk-cover worth Rs 1 core at just Rs 16 per day.
- Provides security in case of an unfortunate event: The biggest advantage of term insurance is that it provides the much-needed financial security to the family members of the life assured and helps them cover different financial obligations like home loans, higher education costs, day to day expenses, etc.
- Provides income support: For an induvial who is the sole bread earner for their family, investing in a term plan is absolutely essential. The reason being, in case of an untimely death of the bread earner, the sum assured or the monthly payouts can provide for the loss of earnings. Term insurance, in this case,would help meet the monetary obligationsso the family cancarryout a healthy lifestyle without unnecessary hassles.
- Offers additional coverage: With different rider facilities available, one can opt for additional coverage with a nominal hike in the premium. Riders such as critical illness coverage, permanent or partial disability cover, accidental death cover, and premium waiver cover allow families to benefit from a greater coverage over and above the regular one.
- Allows you to save tax: In addition to the different financial securities, a term plan can help reduce your tax burden. The premium paid for availing the term plan is permissible for tax deductions under Section 80C of the Indian Income Tax Act, 1961 up to a limit of Rs. 1.5 lakh.
- Easily available: Today, one can easily buy a term plan online after an informed comparison. There are several websites which enumerate the benefits and costs of different term plans.You can easily do a cost-benefit analysis and choose a plan according to your needs.
Taking into consideration the intrinsic benefits of a term plan, it won’t be a wise decision to not include it in your portfolio. Investing in such a plan would significantly boost your financial planning strategies and at the same time, secure your family’s future.