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Double Your Life Insurance Policy as an Investment with Term Insurance Plans



    Double Your Life Insurance Policy as an Investment with Term Insurance Plans


    Nobody wants to think of the end of their life and most go through life with a feeling of immortality. This is shaken only when we see death up close and personal, whether this is of someone in our family or friends circle. The importance of a life insurance policy mostly sinks in when you have a family and you realise that your loved ones are dependent on you for the necessities and essentials of life. Whether this is day-to-day expenses, school fees, or medical expenses, you want to ensure that your family is well taken care of even in your absence. This is where a life insurance policy comes into the picture. 

    Among life insurance policies, the most useful type is the term insurance plan. This is because you can get it at the lowest price with maximum coverage. But did you know that your term insurance policy can also double up as an investment where you get Return of Premium (ROP) if you survive the term of the policy? So, in effect, your term insurance policy can be looked at as a savings scheme and one that also lets you avail tax deductions under Section 80C of the Income Tax Act. 

    Here are the major factors to look out for when choosing a term insurance plan: 

    1. Tenure of the policy: This can be in the range of 20 to 40 years. For those who have a home loan that has a repayment period of 25 years, for example, taking a term insurance policy that is for 25 years will ensure that the loan is not defaulted in case of your untimely death as your family will continue to get an income with the term insurance plan. However, if you survive the policy’s term, you will get back the premium that you paid by almost 100%. 
    2. Premium payment options: Life insurance companies have now made it easier than ever to pay your premiums by offering a wide variety of payment modes. You can pay your premiums monthly, quarterly, semi-annually, or annually. You can also pay the premium in one go, in certain insurance companies, and this is an option you can choose if you are expecting to get a lump-sum payment. 
    3. Maturity benefits: Not all term insurance plans offer return of your premiums if you survive the policy period. Look for special ROP plans for this. It is to be noted that the maturity amount is tax free. If specific conditions are met by the insured, there are insurance companies that will pay you more than the premium paid on maturity.  
    4. Decreasing or increasing sum assured:  This is a feature that is offered by some insurance companies and needs to be reviewed every five years or so. 
    5. Adding riders: Adding riders, even at the cost of a slightly higher premium, can be useful in the long term. Some of the riders that are popular are critical illness, waiver of premium (in case of disability due to accident resulting in inability to work and thus inability to pay premium), income benefit in case of disability due to accident, accidental death benefit, guaranteed insurability option, etc. 
    6. Buying the plan online or offline: Buying a plan offline or online has its own benefits. When buying it offline, you get to meet face to face with an agent and get all your doubts and questions addressed. Whereas when buying it online, you have to do your own research and make a decision on your own. At the same time, buying an insurance policy online can result in a savings of up to 25% which is significant. 
    7. Regulations: Make sure that you choose an insurance company that is reputable, regulated by the Insurance Regulatory Authority of India (IRDAI), and which has a reasonably good claims settlement ratio. 
    8. Top ups: You can top up your term insurance policy with a critical illness cover such as for cancer or heart disease.  

    A term insurance policy that has a Return of Premium (ROP) is not just an ordinary life insurance policy. A long life that is well lived is what everyone wishes for. This option ensures that you have a good corpus of money waiting for you at the end of the policy term when you survive it, making it a worthwhile savings and investment for yourself and your entire family in your retirement years. Not only does it give you significant tax savings in the long term, but it can also double up as a nest egg for your golden years so that you can look forward to a life of peace and comfort just when you need it. Now is the time to think and invest wisely.