Insurance

Why a Term Insurance is essential

Your investments are usually aimed at achieving different goals  that you have. It might be aimed at an early retirement, multiplying your wealth, funding your child’s education, daughter’s marriage etc. It is well and good that you plan these things out and start investing. However, have you thought how these goals can be met in your absence? This is why you should take a term insurance before you lay elaborate plans for your future.

A term insurance ( also called risk insurance) is an insurance product that assures a sum to your legal nominee in case of your untimely death. Unlike a life insurance that couples investment along with insurance, term insurance is not an investment aimed at wealth creation. It aims at protecting your dreams in case you expire before being able to meet your obligations.

The fair question that might arise in your mind is why you should go for a risk insurance that covers only risk while not giving you any returns. This is because, unlike in investment coupled insurance plans, in risk insurance, you can insure yourself for a very high amount for lower premiums. The rest of the money that you would have paid as premium could be invested in assets that yield higher returns and capital gains.

It has to be clear in your mind that insurance is a purchase. It is an expense and an unavoidable one. There are two benefits that can accrue to you from buying term insurance. One is the guarantee of a sum to your nominee in case of your untimely demise, second is the tax exemption that you can claim for the premium paid. Therefore, make sure that you have insured yourself before you set out to meet your investment goals.

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