Should I Save for My Family's Future Instead of Buying Term Insurance?
Making the correct financial decisions at the correct time goes a long way in ensuring a person has economic independence for a longer period of time. In this context, it can safely be said that investments and savings go hand-in-hand. While you need to save some money each year, you also need to make the best investments to ensure your, as well as your family’s, future is secured. One such investment is term insurance. You need to get a term life insurance plan, and there are no two ways about that! There are many reasons why you should maintain the term plan even while you save money. Take a look at this article to know what these reasons exactly are.
Reasons why you need term insurance
1. It is inexpensive -
The biggest benefit you get from term insurance is that it is completely inexpensive. Term insurance is one of the cheapest forms of life insurance. You can get covers worth lakhs of rupees by just paying a few hundred rupees each month. This allows you to buy and maintain the policy with ease. On the contrary, if you save the same amount of money (identical to the premium amount), you will have a much lower corpus at the end of the stipulated time period.
2. The life cover is huge -
The term life insurance plans offer large life covers. You can get covers as high as INR 20 crores or even more. This is very beneficial as you can choose the highest possible cover to ensure your family’s financial future is properly secured after your demise. It is however important to note here that while you need to invest in a good term insurance plan, you also need to look at your budget. The higher the cover, the higher the premium will be. So buy a plan that is comprehensive and within your budget too.
3. It offers multiple protections -
Apart from offering your family a large financial corpus after your demise, a term insurance plan can also take care of other financial problems that may come up after your death. For instance, your family can use a part of the sum assured to clear the home loan. They can also use a part of the money to set up a medical fund or buy a very comprehensive health insurance plan. This is why it is said that term insurance provides a very wholesome life cover, something that your savings may or may not be able to achieve.
4. Helps you to save tax -
The term life insurance plans also help you to save tax. This is in fact considered to be one of the best ways in which you can save tax. You get tax rebates up to INR 1.5 lakhs a year for the term life insurance premium you pay. This provision is available under section 80C of the Indian Income Tax Act.
5. Riders available -
You can also add a number of riders to your basic term insurance plan. Riders are add-on covers that you get at an added cost. These riders offer a larger scope of cover. The common term insurance riders are the critical illness rider, the personal accident cover rider, the waiver of premium rider and the income benefit rider, among others. Go over the clauses of the riders and choose the ones that are of the best use to you. You need not buy every single rider; only a few may suffice, depending on what your requirements are.
6. Multiple pay-out options -
Another important reason to choose term insurance is that your family gets multiple pay-out options after your demise. You need to select the option when buying the plan. You can choose the lump sum pay-out option. Here, the entire death benefit will be paid in one go. You can also choose the staggered pay-out option where the death benefit will be divided into parts and paid over several instalments. This will work as a proper income replacement. Choose the option that would benefit your family the most and offer the best financial protection to them.
7. Straightforward life cover -
A term insurance plan is a very simple and straightforward type of life cover. It is a no-frill life insurance policy. You pay the premium and the life cover stays active. If you outlive the policy period, there is nothing in return. If you die within the policy period, your family gets the sum assured. The simplicity associated with term insurance makes it a very good and handy type of life cover to have.
8. Easy to buy -
And finally, a term insurance plan is very easy to buy. You can get term insurance online in just a few minutes. The plans are easily available online as all the leading life insurance companies in India have a very strong digital presence. You can also compare and see which plan is best suited for you. Then, you can pay the future premiums, add or remove riders, initiate claims, etc using the digital platform as well. This makes it very easy and convenient for you to buy and maintain a term life insurance policy.
Keeping these points in mind, it can be seen just how helpful a term insurance plan can prove to be for yourself as well as your loved ones.
The final word
It is always a very good idea to save money for the future of your family members. It is especially important to save for an emergency fund and for the educational costs of your children. However, to actually prepare for any eventuality and to ensure your family has the best financial cover in case something were to happen to you, you need to have term insurance. You can offer a much higher corpus to your family via a term insurance plan, as compared to just saving some money each month. Keep this very valid point in mind and invest in a good term insurance cover without any further delay.