What is the difference between life insurance and term insurance?  first understand then decide

 Term Insurance Plan means basic life insurance policy without fancy features.  These plans provide financial security to the policy holder’s family in case any untoward incident happens.  Now this plan has become a basic financial need of everyone’s life.  Therefore, no matter what age group you are in, no matter what your financial condition is, if you have a term insurance plan, your financial worries are definitely reduced.

 Life and health insurance are among the most important aspects of financial planning, and here too financial experts recommend that the sooner a term insurance plan is taken after you start earning, the better.  There are several reasons for this:

 Your premium is fixed at the age you buy your policy, which remains the same throughout your life.

 Every year with increasing age, the premium of a life insurance policy increases by 4 to 8%, so it is better to take the policy early and lock the premium.

 If the policy holder has any disease, his premium may increase by one and a half to two times if he buys a life insurance policy at an older age.

 It is important to keep in mind that generally in term insurance plans, the family of the policy holder gets the insurance amount only if the policy holder dies during the policy period.  If the policy holder is alive after the end of the policy period, no amount is paid in the term insurance plan.

In such a situation, you may ask why take a term plan and not a money back or endowment plan?

 First of all, the answer to this question is that according to financial experts, the purpose of insurance is to provide financial security to the family, hence insurance and investment should not be mixed.  There are many other better options for investment than insurance policy, they should be chosen.  Now let us tell you what are the benefits of term insurance?

 Low premium- In term insurance plan, you get more life cover at a very low premium.  If a 35 year old person buys a term plan of Rs 1 crore till the age of 60 years, he will have to pay an annual premium of around Rs 14 thousand.  Now the annual premium for the same thing in the endowment plan will be around Rs 5.5 lakh.

  Whole life cover – Term insurance plans provide very long life coverage.  In many plans, insurance companies provide coverage till the age of 99 years.

 Payment of Sum Insured – After the death of the policy holder, the Sum Insured can be paid to the family either in a lump sum or in the form of monthly or annual income.  The method of payment has to be decided at the time of taking the policy itself.

 Tax Benefit- Tax exemption is also available on the premium paid on life insurance policy under Section 80C of the Income Tax Act.  The maximum limit of this exemption is Rs 1.5 lakh per year.

 One more thing, you should try to get the maximum amount of term insurance policy.  However, its basis is your income, because companies also want to know your income range before issuing the policy.  According to the rules of financial planning, any person should take life cover of an amount equal to at least 5 to 10 times his annual income.  That means, if someone’s annual income is Rs 10 lakh, then he should take term insurance ranging from Rs 50 lakh to Rs 1 crore.  And if the income increases, the policy holder can also take a new policy to increase his life cover or can talk to his existing company and take a top-up plan.

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