Term Insurance is a pure protection insurance that offers financial protection to your family. It do not have any maturity benefits. It is same as car insurance and bike insurance. It would be beneficial only if case of accident or uncertainties of life. The coverage amount or the sum assured is paid to the nominee in case of death of the insured during the policy tenure.
Term insurance are cheap
Endowment plans are both insurance and saving. Your family would get sum issued in case of uncertainties of life. Otherwise, you may get maturity amount in case successful completion of the insurance term. It is saving instrument, not an investment. Because investment is the one which gives more than 8% returns for your invested money. Endowment plans give less than 7% returns.
The financial instrument gives more than 8% returns is investment.
Term insurance are cheap and easily affordable by everyone. So, you can avail term insurance with a high sum assured at nominal premiums. The amount can range between INR 10 Lakh and INR 20 crore for term plans. You can enhance the coverage of your term insurance plan with rider benefits such as critical illness cover, accidental death benefits, the return of premium benefit, etc.
Term insurance is income source for your family. It is must for everyone.
Tax Planning with Term insurance:
The premiums paid toward term insurance can be claimed for tax deductions under Section 80C of the old Income Tax regime. Term insurance is an essential security cover for individuals for effective financial planning. An life insurance, with its savings-cum-security feature, is meant for individuals who are aiming for long term investments along with financial protection. Both these plans are essential for ensuring a smooth life for your dependents. While term plans provide better coverage, endowment plans also fulfil the goal of savings.
In case you looking for tax planning, insurance and investment option, go for term insurance + ELSS mutual funds. You can take term insurance with monthly pay 1200 rupees, remaining you can invest in ELSS mutual funds for long term wealth creation. In case you are 30 years old and looking for 1.2 lakhs for 80C tax saving. Take term insurance with monthly 1500 and invest 8500 rupees in ELSS mutual funds.
Monthly 10,000 rupees for next 30 years in mutual fund and term insurance
Term insurance for 1500 rupees – 1 crore coverage
ELSS mutual funds 8500 rupees monthly SIP : 3 crores
By splitting the your tax planning into term insurance and ELSS mutual funds would give you great benefit in long term.
How to start Term Insurance Plan:
- Login to policy Bazaar and select the term insurance.
- Enter your personal details such as name, data of birth and mobile number. It would list the insurance service provider and premium.
- Select any one of the insurance provider from the list such as ICICI prudentials, HDFC Life, Max Life, Bajaj Allianz and AegonLife .
- Provide payment information and complete your term insurance
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PayTM Money + 110 rupees, Mutual fund investment takes just 3 min.
Freshers or first time taxpayers? Knowing 80C would save you 10000 rupees.
No. HRA is not included in Section 80C(1.5 lakhs). PG receipt also works for HRA.