SIP & Term Insurance Plan – An Ideal Combination for Investors
By Akhil Chugh
Date March 13, 2022
‘SIP’ prepares you for the long term while a ‘Term Insurance Plan’ can make you tension-free from the moment you buy it. Term Plan comes with a dual advantage of securing your family’s future and saving taxes as well. ‘SIP’ and ‘Term Insurance’ are a brilliant combination in one’s portfolio. Moving hand in hand with each other, these financial products can create a win-win situation for an investor. The investor is not only generating a huge corpus for him and his family but also securing themselves from any unforeseen circumstances.
Let’s first understand what is a term plan and its benefits.
What is a Term Insurance Plan (TIP)?
Term Insurance Plan (TIP) is the purest form of insurance product that offers financial coverage to the policyholder against the minimal amount of premium paid for a specific period of time. If the insured dies during the policy term, a death benefit is paid to the insured’s family.
Some of the benefits of Term Plan are:
- The premiums are affordable to an investors’ pocket that can be paid on a monthly/yearly basis.
- Term plans allow tax deduction under section 80C and hence are eligible for tax benefit under section 10(10D).
- They allow high insurance amounts provided to your family members to maintain a regular living and pay off the family debts, in your absence.
- Helpful in achieving long-term goals. With low premiums, investors can invest the remaining savings in mutual funds via SIPs to achieve their long-term financial goals like retirement, child education etc.
With high insurance coverage of up to Rs 1 crore at an affordable average premium of Rs 12,000 for a 30-year-old, a term insurance plan should be the first thing to buy once you have dependants. High insurance money helps your family members meet regular expenses and repay outstanding loans in 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 finalise the best insurance plan for you. 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!