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Top 5 Reasons You Should Invest in Term Plan

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5 Reason to invest in Term Plan
May 18, 2018

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The new financial year has begun, which means one important thing for salaried individuals: annual increment letters. All the long hours and hard work you've been putting in for the last 12 months have finally culminated in a performance bonus. Naturally, the extra cash in your account opens up a whole new world of opportunities. And while spending your raise on a vacation sounds like the perfect idea, perhaps a more fulfilling reward might be to invest in the financial security of your loved ones.

Most experts recommend that at least 75 percent of the net bonus should go towards building a sizeable emergency fund. With a host of investment plans available in the market today, your increment can act as a gateway to the secure financial future of your family. One of the most sensible ways to achieve this is by investing a small fraction of your money in a term plan.

A term insurance plan ensures that your family is protected in case something happens to you. It is designed with the sole purpose of providing coverage against the risk of death. If you're on the fence about whether you should make this investment, here are five reasons why you definitely should:

  1. Buying Early Costs Less

    When it comes to insurance, the sooner you start investing, the lesser it costs. This is because there are fewer risks involved when you are young and healthy. As you get older, your susceptibility to medical conditions might increase. So, even though the sum assured in the coverage will remain the same, the rate of premiums will increase as you get older.

  2. The Premiums are Affordable

    Term insurance offers a high level of sum assured at extremely affordable premiums. For instance, a 30-year-old non-smoker male can avail a coverage worth Rs. 1 crore for 30 years at a monthly premium of less than Rs. 800! By comparison, a family pack of four pizzas would cost you just as much, if not more.

  3. It Offers Peace of Mind

    In essence, insurance is about building a safety net for the buyer. A term plan guarantees that in the event of a tragedy, the financial requirements of your family will be well taken care of. This peace of mind can have a highly positive impact on the quality of your life.

  4. It is an Expense Manager

    If you are the sole breadwinner and your family relies on you for daily expenses, a term insurance plan gives them the ability to fulfil monetary obligations in your absence. It will cover any unpaid loan you may leave behind and spare your loved ones the burden of debt, while helping them maintain the same lifestyle.

  5. It Provides Tax Benefits

    A term insurance policy makes you eligible for many tax benefits under sections 80C, 80D, and 10D of the Income Tax Act. This means that premiums up to Rs. 1.5 lakh per annum are exempt from taxes, as is the maturity amount or death benefit you receive.

The importance of a term insurance plan cannot be stressed enough. Not only is it an essential investment that will enhance your financial portfolio,but given the above returns, it will also vastly improve your family's quality of life at a minimal cost. After all, there is no greater reward you can give yourself than peace of mind.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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