How Smart is Life Insurance as an Investment? Things to Ponder

When it comes to life insurance as an investment, term life insurance is the best choice for most individuals. The life insurance plans are the least expensive plans and allows the insurer to leave money free for other investments. Having a permanent life insurance allows individual to accumulate cash whereas term does not. Here we have discussed some of factors to validate the point, whether life insurance is a good investment option.

Decide how much Life Insurance you actually need-

Prior purchasing any life insurance policy it is important to know that how much life insurance you actually need. This is important for a couple of reasons. First you will purchase the policy as much as you need. This will help you from getting into unnecessary purchase of policy and putting yourself in trouble of paying more premium. After all your point of purchasing insurance is to provide protection to your family members in your absence. By deciding on the amount of life insurance you should have, you can also plan your investment simultaneously in order to achieve the financial goal.

You can keep the policy until age 100, as long as you pay premiums-

One of the best reason to have a life insurance is that as compared to term insurance in life insurance the insured does not lose the coverage after a particular term of years. The tenure of the policy comes to an end, when the insured reaches to his/her term end i.e. 60 or 70 years. If the insured survives the whole tenure of policy and dully pays off all the premium, then a maturity benefit as sum assured amount and additional bonus is offered to the insured after the completion of policy tenure. If you have a permanent life insurance policy then the beneficiary of the policy is also eligible to get death benefit in case of uncertain death of the policy holder during the term of policy.

Tax Benefit is one Major Advantage-

Life insurance plans as well as investment plans provide tax benefit to the insured under section 80C, 80D and 10D of Income Tax Act. This benefit of cash- value component means that the insured does not need to pay taxes on any interest. Moreover, the maturity benefit is also exempt to tax deduction under the applicable section of Income Tax Act. Some of the insurance policies like endowment plan, ULIP plan, money back plan, etc. allows the insured to cash out their insurance at the end of policy tenure. Moreover, the policy offers a permanent life insurance that grows in value over time and can ultimately be cashed at the end of the policy term. Apart from the investment returns having a life insurance policy allows the insured to avail the advantage of tax- benefit under the applicable section of income tax act.

Affordable Life Insurance can provide more Opportunity of Investment-

One don’t need to buy a policy that is too expensive and comes out of your affordability. Depending upon the health and income individual cab buy a policy according to their suitability. In today’s time one can surf online get a wide options life insurance policy. To choose the most suitable plan according to your own needs you can compare the plans online and choose the plan that provide maximum coverage in minimum premium. With the minimum premium rates you can plan your investments accordingly and can get good returns once the policy tenure comes to an end.

Although using life insurance as an investment can be risky, if it is planned in an intelligent way it can be very beneficial and can give good returns of investment.