13 SEP 2016
The right reasons to buy term life insurance
“Invest directly in stocks. The insurance companies also invest there”. ” Investing in ULIPs will give you better returns”.” What is the rate of return that they are promising you?”. “ Buy a policy only during Jan-Feb. After all, they only give you tax rebates”.These are the reactions that you will usually get from colleagues, neighbours, relatives and friends when you tell them that you are investing in life insurance.
If you get confused and try to google about life insurance, you'll get to see this as the definitions of life insurance:
- Life insurance or life assurance, is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder).*
- Life insurance is a protection against the loss of income that would result if the insured passes away in an untimely fashion. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured.#
The above definitions may perhaps confuse you even more. If there is nothing written in the definition about returns on the 'investment' in insurance, why on earth are people looking at returns in life insurance? Or for that matter, at tax rebates? Its because of this perception among many people that insurance is an 'investment' where you invest money and get 'returns' in the long term. This perception is not in alignment with what life insurance stands for. Life insurance stands for coverage of risk against the financial burden that would befall the beneficiary in the event of the demise of the life assured. In other words, life insurance is to be considered as an 'investment' in your family where they will get the 'return' when you are no longer in their midst.
A term plan
A policy or plan that represents life insurance the best is a term plan. A Term Plan, like Edelweiss Tokio Life – MyLife+ is insurance in its purest sense, wherein on death of the life insured during the policy term, the nominee or the beneficiary gets a fixed payout. Term plans cover all forms of death like death due to accident or illness or acts of God. Only suicide is not covered in the first two-three years, depending on the terms of the policy. Some plans have the flexibility of giving you an option of monthly payouts or lump sum payments. A term plan ensures that your family stays protected when you are no longer there to fend for them. With the advent of online term plans, buying a term plan is easier than ever before. A Term plan has no maturity or survival benefits and hence is a pure risk-coverage plan.
It is high time that we think about life insurance in the right way. It is unfair to compare life insurance with FD's and MF's. Life insurance is a means to secure your family's future against the financial burden that your untimely demise may result in. A term insurance plan is the best and cheapest option for securing your family's future. So, go ahead and choose a term plan for all the right reasons. Generate a quote today and find out the best match of premiums to be paid and Sum Assured to be covered for your situation.
13 OCT. 2017
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