Right, the big question about tax savings, insurance and their ilk. While the classic term life insurance policy looks like a lucrative option to help you save taxes and bundle up finances for the time when you aren’t around anymore, there are pointers about it that might raise a bit of concern. As a smart investor, find everything you must about term life insurance before you actually invest in it. As they say, not everything that shines is gold!!
However, term life insurance is a massively popular option with the Indian populace. All the major insurance players market this lucrative policy that offers the buying customer a measure of security, helping him/her plan for the future of their immediate loved ones in the event of their own untimely demise. Who doesn’t want to feel secure and protected in these times of financial, social and medical uncertainties?
Herein is a comprehensive look at term life insurance policies. A fine mix of pros and cons-
1. It’s Super Affordable– Term life insurance is definitely the cheapest form of life insurance that you can buy.
2. Not Rocket Science– It’s easy to understand the workings of a term life insurance. You are purchasing pure death protection without equity or maturity benefits. The documentation doesn’t have too many variables or complicated clauses.
3. Value for your Money– Purchase the sum insurance that is just right for you, without having to pay more than what is affordable.
4. Not designed to last a Lifetime– Usually, premiums increment and ultimately become cost prohibitive, thus rendering your policy unmanageable beyond a certain term. A vast majority of the people outlive the coverage and have to abandon the policy due to the high upkeep costs.
5. Guaranteed and Affordable Rates– Another advantage of term insurance is that the rates remain a constant figure. Lock in rates is available for a wide range of tenures, alongside options for lifetime guaranteed term policy.
6. Covers Short Term Needs– Term life insurance can also be sometimes used as a stopgap solution for temporary obligations. For example, any financial debt that is viewed as a probable pain point for your family after your demise can be accounted for using a term life insurance.
7. Zero Cash Value– The lack of any maturity benefits makes this an investment with no actual cash value.
8. Turns Cost Prohibitive over Time– A big drawback of term life insurance policies is that they tend to become cost prohibitive over time, as they are designed to be temporary. If you are looking for a life insurance solution that extends beyond your own life expectancy than this option wouldn’t work. Premium payments for term life insurance policies increase after the initial guarantee period is exhausted- thus, it isn’t feasible in terms of the rising costs.
As is obvious, term life insurance policy isn’t about cash returns on maturity or a profitable proposition after the initial guarantee period is completed. However, its affordability and ease of execution has earned it a loyal fan following. Amongst the less investment minded people, its tax saving property is a sure fire hit- yesterday, today and far into the future.
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