SIP & Term Insurance Plan – A Winning Strategy for Investors
By Akhil Chugh
Date November 26, 2023
‘SIP’ sets the stage for long-term financial growth, while a ‘Term Insurance Plan’ offers immediate peace of mind from the moment of purchase. A Term Plan provides a dual benefit by ensuring the future security of your family and offering tax savings. When seamlessly integrated into one’s portfolio, ‘SIP’ and ‘Term Insurance’ form a powerful combination. These financial instruments work in tandem, creating a mutually beneficial scenario for investors.
By diligently navigating the waters of both, investors not only build a substantial financial nest egg for themselves and their families but also fortify against unforeseen circumstances. Now, let’s delve into the concept of a term plan and explore its myriad benefits.
What is a Term Insurance Plan (TIP)?
A Term Insurance Plan (TIP) stands out as the purest form of insurance, extending financial coverage to the policyholder against a minimal premium for a specified duration. In the unfortunate event of the policyholder’s demise during the coverage period, the family receives a death benefit.
Several advantages make Term Plans an attractive option:
1. Affordable Premiums:
The premiums are designed to be budget-friendly, offering flexibility with the option to be paid on a monthly or yearly basis.
2. Tax Deductions:
Term plans qualify for tax deductions under section 80C, making them eligible for benefits under section 10(10D). This feature adds a layer of financial advantage for the policyholder.
3. Substantial Coverage:
These plans provide substantial insurance amounts, ensuring that family members can maintain their standard of living and settle outstanding debts in the absence of the insured.
4. Long-Term Goal Achievement:
Beyond immediate benefits, Term Plans play a crucial role in realizing long-term financial objectives. With low premiums, investors can channel the remaining savings into mutual funds through Systematic Investment Plans (SIPs). This dual approach helps in achieving long-term goals such as retirement planning and funding a child’s education.
Securing an extensive insurance coverage of up to Rs 1 crore becomes remarkably accessible with an affordable average premium of Rs 12,000 for a 30-year-old. Prioritizing the purchase of a term insurance plan is essential, especially when you have dependents. The substantial insurance amount serves as a financial safeguard, enabling your family members to address routine expenses and settle outstanding loans seamlessly in the unfortunate event of your absence.
SIP & Term Plan – A Perfect Combination
Everyone wants to be rich in no time. At the same time, you want to protect your hard-earned money, but there’s one thing that can cause a major blow to your savings: death. Saving is a good habit and doing it systematically is the ideal way to plan for the future. But in case of sudden untimed events, the Systematic Investment Plan (SIP) may not be able to help your dear ones. So how do we full-proof our investment plan?
If you are investing approximately Rs 25,000 per month on your mutual fund SIP, you can plan your future better with a minimum additional monthly allocation of Rs 1,000 on buying a term insurance plan. See table below:
You cannot predict the future, but you can be well-prepared for it. A Term Insurance Plan (TIP) perfectly fills the void. SIP prepares you for the long term while a TIP can make you tension free from the moment you buy it. Term Insurance Plan (TIP) is the most affordable way to protect your family’s future.
Besides protecting your family’s dreams, a combination of a term insurance plan and SIP investments will help you achieve your long-term goals like children’s education and marriage with peace of mind.
Once you buy a term insurance plan, you can be sure that your family will get the required financial backup when you are not around. To achieve complete financial security, TIP is as important as an SIP.
Net Brokers Takeaways:
Evaluate your financial needs and family expenses when you finalize the best insurance plan for yourself. Remember, the period of coverage should be available till all your liabilities are over.
Get in touch with us at mail@netbrokers.co.in to learn more about available Term Insurance plans.
Download our mutual fund app & start investing for your long-term financial goals.
Happy investing!