When you think of investments, you may invariably think of getting returns on investment. But is it right to think of term life insurance as an investment? Or is buying an insurance policy an expense? Let us know more.
As the name suggests, a term insurance policy offers protection against the uncertainties of life for a specific period. It could range from 5 to 30 years or more. If you pass away during the policy period, the insurer will pay the sum assured, i.e., the death benefit, to the nominee.
However, if you outlive the policy period, unlike ULIPs or endowment policies, term insurance does not provide any maturity or survival benefits upon maturity. However, you can renew the policy for another few years and extend financial security to your family.
Since term insurance does not provide maturity benefits, many people believe buying term insurance is unnecessary and an avoidable expense. However, the truth is term life insurance is a worthy investment because of the various benefits it offers, which are discussed below:
· Guarantees security
When you think of returns on investments, you must not equate them to monetary benefits. When you buy a term insurance policy, you are essentially investing in the safety of your family, especially those who are financially dependent on you. Term insurance is an investment in mental peace that you get knowing that your family will have sufficient financial cover to care for their needs in your absence.
· Affordable premium
Another reason why buying a term insurance policy is a worthy investment is affordable premium. The term insurance has the lowest premium compared to other life insurance plans because it has no maturity benefits. You can purchase a term insurance policy with a high sum assured up to ₹1 crore for a period of 30 years at a premium starting from ₹500 per month.
Term insurance policy offers you immense flexibility. You can buy the plan offline through an insurance agent or online directly from the insurer’s website. Many insurers do not even make health check-ups mandatory for policies up to a specific coverage amount.
You have the flexibility to choose the premium payment mode, the policy tenure, and the coverage amount to suit your specific needs and budget. Lastly, you can customise the term plan by purchasing riders or add-ons of your choice and enhancing the policy’s coverage scope.
The riders allow you to get coverage against specific risks that are not covered under the standard policy. Some of the most popular riders you can consider buying are critical illness cover, accidental death benefit cover, premium waiver benefit rider, etc.
· Financial freedom for family
Once your family receives the sum assured amount, there is no restriction on how they can spend the money. They can use it for last rite rituals, child education expenses, daily expenses, paying off the loans (if any) or anything they deem fit. If you choose deferred payout mode, your family can periodically receive the death benefit in smaller instalments, which can act as an income replacement after you are gone.
Thus, with so many amazing benefits, term insurance is an excellent investment to have in your portfolio. Make sure that you assess your needs carefully and choose the right plan.