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Why to Choose Term Life Insurance Plan ?

Its December, And its time for tax planning for most of us ! Do you agree? Yeah Most of us will , Because in India we all do tax planning in December , To save tax there are so many options, but the best one I would prefer is a Insurance policy, 5 years ago I did a mistake taking a insurance policy just to save tax which also offered Money back,, Later on , when the policy was nearing its maturity I had realised that We should not combine Insurance and investment ( I heard this many times from experts as well).

One of my friend Ramesh is also highly attracted towards Insurance policies which offer great returns, But I believe if you want to invest, there are many other Alternate options like Land, House & Gold. My sincere advise is to treat investment and insurance separate. But Everyone must have a Insurance policy which offers Sum Assured of 10 times your Annual income ( As per Advice of Major Insurance companies in India Like - LIC, Bharti Axia, Birla Sunlife etc). Please do understand only pure insurance plan like term plans can provide you the higher sum assured.

In One line- I recommend - Term plan a must for Every Individual, I will tell you why?

Let us assume you want a sum assured of Rs 1crore, Feels like a big amount, No it is not,, Consider the inflation and living standards,, ( Just think about the mobile phone you are using- 5000 rs phone in 2007 to a 10000 rs phone in 2013). It costs you around Rs 30,900 a year for a period of 25 years to have sum assured of Rs 1 crore in a Term plan where as in a Endowment plan or a money black plan it can cost you Almost all the amount because for the most hot selling Jeevan Anand Plan you will have to pay Rs 2,05,728 yearly for 25 years to have a sum assured of Rs 50lakhs ( You will pay a premium more than 50 lakhs . Of course on maturity you will get Rs 1 crore. 

By seeing the above , You can easily understand you really pay far less for term plan (in this case it is 7 times lesser premium). Only drawback is you or your family will not get any money back if you survive till the maturity period. But let me ask you one more question? If you survive till 60, You are there to take care of all your family's financial needs. wHY do they need Insurance amount?  In simple words if you have started paying premium and after 5 years (premium paid is 1,50,000) by chance anything unwanted happens, Insurance company will pay Rs 1 crore to your family

On the other note, You can see That Rs 2575 per month is really affordable to most of us. Where as Rs 18,649 per month is huge amount. Difference of Rs 16074/-

Add more 4000 to 16074 and you will have Rs20000 which can help you pay EMI for your home loan. My Bottom line about Term Plan and Endowment plans is that, I will go for Term Insurance Plan and strongly recommend Term plan against Endowment plans or Money Back plans

Why to Choose Term Life Insurance Plan ? Reviewed by Gowardhan on 12/08/2013 10:00:00 PM Rating: 5


Harini Ethimex said...

Nice post..

Readitt said...

thank you Harini

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