As soon as one starts earning, the first thing he starts to think is that which investment avenue he should prefer over others and why. There are various investment options available in the market, but it is advisable that one should prefer life insurance over others in the first place.
Life insurance not only provides your loved ones financial protection in case something happens to you but also help you in meeting expenses that are required on different milestones of your life. It can also help you at the time of any illness or for retirement planning.
Life insurance can be preferred over Public Provident Fund (PPF) and bank Fixed Deposits (FDs) as in a life insurance policy if the policyholder dies after paying even just one premium, the nominee will receive entire sum assured. However, in case of PPF or FD the nominee will get only the amount that is deposited along with interest.
And if you compare life insurance plan over National Pension System (NPS), life insurance is advisable as NPS has less flexibility than a life insurance plan.
Life insurance is also more liquid option as you can opt for policy loan, partial withdrawals or even surrender a plan in case of an emergency.
And while comparing life insurance with mutual funds, life insurance is more preferable as it gives you flexibility to choose your investment funds. And in addition life insurance provides life cover as well.
And among life insurance plans, term insurance is the best form of insurance as it gives a very high coverage at a low price. The premium of a term insurance plan is a fraction of what you have to pay for buying an endowment, moneyback or unit-linked insurance plan (ULIP) with the same coverage. This is because there is no investment component and entire premium goes towards covering the risk.
And buying online term insurance plan is even cheaper option. Premium for online term insurance plan is lower as there is no intermediary and entire cost is passed on to policyholders.
