Advatages & Disadvantages of Term Insurance

 It is very common to hear these days that people just take term insurance for the sake of coverage and invest the rest in the stock market or Mutual Funds.  So before you take the decision of just takeing the Term Insurance make sure you read this article till the end.


Below I have mentioned the advantages and Disadvantages of having only Term Insurance

 Advantages & Disadvantages of having only term Insurance

Advantages 

1)     Cost – Effective:  in a small amount you get a big cover that would help your family in an unforeseen event

2)     Tax Benefit:  the premium paid can be claimed as a deduction under sec 80 C.

 

Apart from this, there is no other advantage.

 

Disadvantages

1)     It is not meant for those who intend to save money for future financial needs

2)     The term plan is not designed to assist in terms of finances when the policyholder is alive.

3)     Buying a term plan does not enable you to create wealth whereas an endowment does.

4)     It is taken only for life coverage, and it is not designed to build a cash value.

5)     Data shows that 80% of term plans lapses and there are very fewer possibilities of getting revived due to formalities.

6)     Term plan gets only 15 days grace period to pay after which the policy lapses against the conversion plan where there is a period of 180 days.

7)      In case of emergencies, you cannot take a loan on term policy but you can take a loan on conventional policies

 

 

Conclusion:  You need to have a combination of both because any one plan will not fulfill both financial goals.  To cover its Term and for savings its conventional plans.

 

 

 

 

 

 

 

 

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