Strategic Fusion of SIPs and Term Insurance Plans
By Akhil Chugh
Date May 26, 2024
Embark on a secure financial journey: SIPs for long-term growth, Term Insurance for instant peace of mind. Together, they form a winning duo in Your Portfolio, offering Wealth Accumulation and Family Security. With SIPs, you’re building wealth for the future, While Term Insurance ensures immediate protection and tax savings. This symbiotic relationship between SIPs and Term Insurance paves the way for a bright financial future, shielding investors from unforeseen events while simultaneously nurturing generational prosperity.
In this blog, we’ll delve into the nuanced dynamics of SIPs and Term Insurance Plans, exploring why their synergy forms an ideal partnership for investors seeking to fortify their financial portfolios.
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. If the insured dies during the policy term, a death benefit is paid to the insured’s family.
Some of the benefits of a Term Plan are:
- The premiums are affordable to an investor’s pocket and 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 dependents. High insurance money helps your family members meet regular expenses and repay outstanding loans in your absence.
The Synergy Unveiled: Why SIPs and Term Insurance Make a Winning Pair
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 fully-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 the 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:
In a landscape fraught with economic uncertainties and evolving life circumstances, the amalgamation of SIPs and Term Insurance emerges as a beacon of financial resilience. By harnessing the growth potential of SIPs and the protective shield of Term Insurance, investors can navigate the complexities of wealth creation with confidence, knowing that their financial legacy is secured against the vagaries of life. As the adage goes, “Hope for the best, but prepare for the worst.” With SIPs and Term Insurance, investors can do just that – hope for prosperous tomorrows while fortifying themselves against the unforeseen challenges that may lie ahead.
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!