Insurance policies have always been considered as Tax savings instruments and we take most such policies during the end of fiscal year to save on tax. Investors who invest in Life Insurance Policies that offer 10 times higher life coverage than the annual premium by him can. For instance, say, if you have invested in a ULIP policy towards which you pay an Annual premium of Rs. 10,000/- the life coverage that the policy must offer you must be a minimum of 1 Lakhs. If the product fails to offer the minimum coverage of 1 Lakhs, then you will be paying tax for the income accrued for the same at the end of the tenure.
The general norm in public minds makes them look at Insurance policies as Wealth creator where as in reality they are wealth protectors. This makes them go in for Endowment Plans and ULIP’s which offer very low levels of risk coverage. This makes having such policies absolutely irrelevant form a coverage point of view. Having a huge cover for clearing off all the debts at any point of time is prudence. This may amount to accumulating wealth that almost 8 to 10 times higher than that of one’s total annual income. This means, a person who annual gross income is Rs. 5, 00,000/-, he must ensure he has a minimum coverage of 50, 00,000/-
Term Insurance Plans, on the other hand, is highly economical owing to the lower premium rates that need to be paid. For instance, an investor who is just 30 years old gets a whooping 1 crore insurance cover when he pay a meagre Rs. 10,000/- per year. When you go in for such a huge coverage through ULIP policies or Endowment Polices, it will cost you huge premium per annum. The benefit Term Insurance Plans offers is huge both in terms of cost savings when it comes to premium payments as well as the tax benefit it offers alongside. Lack of knowledge about the advantages that Term Insurance Plans offer makes people avoid them depriving them of the high coverage levels at low cost premium amounts.
If you are an investor who is also on the lookout for adequate insurance coverage, go in for Term Insurance Plans that offer the dual benefit. Term Insurance Plans offer the maximum benefits to investors whose requirements are multifold form Insurance products. Avoid buying insurance from an investment angle. Buy Term Plan to safeguard you interests.