Did you just purchase a new car and secured it with a four wheeler insurance? Perfect!
But…What about life insurance? Have you ever thought that of your wife if something happens to you? What about your retirement plan?
A term insurance plan is the most basic and the purest form of life insurance plan that you should be opting for as it financially secures your family in an unfortunate event of your demise.
Many people in a hastened effort to save taxes will be looking at investing in insurance plans that promise exemption as the year ends and as the last quarter of the financial year beckons. Even though there are arrays of insurance plans to choose from, it is prudent to assess your budget and the coverage or return you seek, and then go for an alternative that suits your needs. If you have excess fund, then you can split the same into term insurance and other investment options.
As a primary financial decision you should purchase a term insurance plan first as this is designed for to financially secure the future of your dependents. These plans offer large life cover at lower premium rates. On purchasing a term insurance plan, the policyholder can gain tax deductions of up to Rs 1.5 lakhs under Section 80C of the Income Tax Act, 1961.
When buying a term insurance plan, you should always take a suitable life cover based on your family’s needs as an insufficient life cover will not help your family much, whereas if you opt for a life cover more than how much you really need then it would make you pay a premium beyond your capacity. While selecting your life cover, do take in all the costs and funds which will be required by your family after your demise.
Return-Oriented Insurance Plans
Once you have your primary insurance plan in place then you can opt to invest in Unit Linked Insurance Plans which is catered to fulfil your need for investment. It is an investment-linked insurance plan that promises good returns in the near future. Those in higher tax brackets can choose for these plans on an annual premium basis and get highest benefits.
So when you make a decision to buy an insurance plan for yourself, keep in mind that there are different plans serving different purposes. You need to select the plan which will suit your insurance needs prudently!
You may have always overlooked the importance of life insurance and simply considered them as tax saving instruments. But it’s high time now, that you consider securing the future of your loved ones as they are your primary responsibility!