Why term insurance should be at the top of the financial task list



Insurance is an essential tool in ensuring your financial security and that of your family in the event of unforeseen distress. Insurance can’t be thought of as a financial product, but adding term insurance to your financial plan can help in a crisis. It helps the legal heirs of an insured, at the time of his death, to obtain a fixed income, to receive an invested sum or to claim insurance.

Sanjay Tiwari, Chief Strategy Officer of Exide Life Insurance, said: “A diversified investment portfolio enables people to invest in a systematic and disciplined manner. Insurance, on the other hand, is a product that provides financial guarantees even in the absence of the policyholder. “

When you have insurance in your pot, there is an intangible promise of insurance.

Sushil Jain, CEO of PersonalCFO.in, said, “If you don’t have adequate insurance coverage, your financial plan is always on a pile of uncertainties. “

Advantage of having term insurance: The sum insured is usually a huge multiple of the premium you pay. If one were to invest this premium amount instead, it would take many years to reach the typical sum insured offered by these policies. By purchasing term insurance and paying regular premiums, you protect yourself against unforeseen financial needs from day one.

If you are a breadwinner, you must purchase term life insurance. A term insurance policy also saves taxes, as the premium paid, profits made, and coverage an insured receives are generally tax-free under different sections of the Income Tax Act, such as 80C and 10 (10) D. Thus, the insurance makes your income received from the insurance company fully tax exempt and allows you to get a healthy amount of money.

Points to consider: Other life insurance contracts, such as unit-linked insurance plans (Ulips) and endowment contracts, have a savings component. In the event of survival, these policies pay a survivor benefit and a death benefit in the event of death during the term of the policy. Pure term insurance policies, however, have no savings element. These policies benefit the nominee only in the event of the death of the insured and therefore there is no maturity value if the insured survives.

This way, most of us consider purchasing life insurance policies that offer guaranteed benefits and neglect term insurance. However, experts suggest that when buying life insurance, term insurance should be given priority. Additionally, if you are in need of life insurance, you should consult your financial advisor and purchase other savings policies only after purchasing term insurance with sufficient insured amount.

Srinath Mukherji, Co-Founder and Director of Sana Insurance Brokers, said: “Insurance products for families and individuals are generally of two types: pure risk and linked to savings. Pure risk policies usually pay out claims for unforeseen events, while savings policies also reimburse you after a period. Opinions may differ on having savings related policies in your portfolio, but pure risk policies, such as term life insurance, are an absolute must. “

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