Why Term Insurance Needs to be the First Purchase in Your Financial Plan

The right investment portfolio ensures that you are prepared to face any unforeseen circumstances that can hamper your financial aspirations. While creating the road-map of your financial plan, buying a life insurance policy should be the first thing on top of your list.

As life is uncertain, and you cannot predict the future, it becomes essential to think about your family’s financial safety. Life insurance can mitigate the risk of your untimely absence. It ensures that your family members lead a financially comfortable life even when you are not there to look after them.

A life insurance term plan is one of the best options among numerous insurance policies primarily because of these two reasons, affordable premium and high sum assured. Moreover, the premium reduces further if you buy term insurance online, as the insurer eliminates the cost related to the agent’s commission.

Term insurance only provides life cover only for a specific tenure, unlike traditional plans that will cover you until survival. A term plan is purely a life insurance policy that covers the risk of death. It does not comprise any investment component. So, only if the policyholder passes away during the policy period, the insurer will pay the sum assured to his or her nominees.

The premium of a term plan remains fixed throughout the tenure of the policy, and it is quite nominal when you buy it at a younger age. Therefore, it is advisable to start early so that you save a considerable sum on premiums over the years. Read on to know why a term insurance plan is the foundation stone of a strong financial portfolio.

  • It helps in risk management

You may invest in stocks, mutual funds, and bank fixed deposits to accomplish your long-term financial goals. Investment in equities is risky. You need to be careful, as you are investing your hard-earned money. It is necessary to stay alive to make the most out of your returns on equity-oriented investments. However, nobody knows what is in store ahead. And, you are no exception. Therefore, it is necessary to have a life insurance term plan in your portfolio. It will ensure that the aspirations of your loved ones will be achieved even in your absence. If anything unfortunate happens with you, your family members will get the sum assured, which can help them to fulfill their monetary requirements and goals.

  • It offers tax deductions

Salaried people invest in financial instruments that can help them to save tax. Term insurance is one such tool that provides tax exemptions and ensures your family’s financial well-being against the uncertainty of life. As per Section 80C of the Income Tax Act, 1961, you can claim a maximum deduction of INR 1.5 lakh per annum for the premium that you pay for your term plan. Besides this, the sum assured received by your policy’s nominees is tax-free according to Section 10(10D) of the Act.

  • It provides financial security

If you are the sole breadwinner of your family, you will be worried about their economic future if anything untoward happens with you. Also, what if you have liabilities on your head? Who will repay these monetary obligations when you are no longer around? The burden of debt can ruin the finances of your dear ones. If you have a term insurance policy, it can take care of all your encumbrances. Here, the sum assured can prove handy. Your family can utilize this amount to repay all your debts. So, it is vital to opt for a high sum assured, which can repay the loans and aid your family members in living a financially independent and peaceful life.

Now when you know why to invest in a life insurance term plan on priority, it is recommended to purchase an ideal policy at the earliest. You can compare different plans on the Internet and buy term insurance online in a few minutes.

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