Life Insurances 212 views
There is no way that you can safeguard yourself against death. Yes, it can be delayed, but not denied. There is no denying on the fact that After the death of an individual, the emotional ripples touch the family, friends and even the acquaintances. But, there is another factor that needs to be considered here-the economic one. Yes, after the demise of a breadwinner might plunge a family into major financial crisis. However, death is one such event that is certain, but the economic uncertainty can be avoided with the help of investing smartly in a plan.
These days,there are plenty of insurance plans are available in the marketplace, you can easily choose the one that best suits your requirement. But, before buying, you must compare and understand various plans being offered by different insurance companies. When it comes to comparison, there is no denying on the fact that term plans are among the most easily comprehensible ones. Yes, its basic premise is very simple i.e. pay a premium and get covered for a pre-determined time. Moreover, in case of death of the policyholder, the nominee/nominees will get the sum assured.
Moreover, term insurance is more like an expenditure than an investment. Yes, as it does not result in any additional benefits, and also has no surrender value. Hence, in case if a policyholder is alive, neither he/she nor the nominee will get any sort of payment from the insurer. But, it does not mean that investing in the term plan is totally not worth it as it gives you peace of mind and give your family a sense of security in case of eventuality. Not only this, in fact there are various other benefits also and i.e. these kinds of policies are flexible and it is quite easy to opt out of a term plan against to a cash value policy.
Furthermore, in case of any contingencies, when your funds are tied up elsewhere, and it is quite difficult for you to afford the premium, these term plans will terminate. While on the other hand, if you do not pay a premium for a cash value policy, you will significantly lose out on your savings because the insurer will do the substantial deductions. Just because these kinds of policies do not have saving component, thus the amount of the premium is lower than that on other schemes.
However, one thing that needs to be mentioned here is the fact that the premiums being paid towards these policies and income accrued both are eligible for tax deductions.
More to the point, there are renewable and convertible term plans which you can consider. The first one provides you with the option of policy renewal without the medical examination when the existing one is at its end. While on the other hand the second plan allows you to convert to an endowment policy with having the same sum assured, but with rise in premium amount.
Buying a term policy is absoultely a good decision for those who are in a low income bracket, but are having the significant number of dependants. Moreover, one should not buy this policy with an intent of funding the children's education or with the perspective of saving tool. Furthermore, just because this plan is very reasonable, hence it would be a smart decision to purchase the one as a part of your investment portfolio. You can go for a convertible term plan, if you are experiencing the fund crush situation, and are optimistic about a good cash flow in the near future.
Now, here comes the question-what is a perfect age to buy a term insurance plan. Well, to be very honest, there is no fixed date by which one should buy one, but just like other insurance products, it would not be wrong to say that the earlier the better. Thus, if a person is buying a term insurance plan in his/her 20s is likely to shell out less as compared to a septuagenarian.
It is be best for all the young professionals because it is cheap, and also covers your parents in case of unfortunate demise. However, when a person progresses in his/her career, and has a spouse along with a child to look after, it would not be wrong to say that term insurance is considered as a necessity. Yes, because at a nominal cost, it offers financial security to the dependants, but when the children grown up it makes more sense to avail a term insurance plan. In fact, at that age, people usually have enough money with which they can afford a cash value policy, offering additional benefits as well.