Here is why you should buy both – term insurance and ULIP
Nearing the end of his employment years, Rajesh was in a fix as to whether he should invest more or pay higher premiums for his life insurance, in a bid to secure his family’s future even after he was no longer with them. Browsing online, he came across multiple options, several of which appealed to him, but confused him owing to the overlapping benefits on offer. Benefits of ULIP plans seemed significant to him since it offered both investment and insurance coverage. Still, the premiums that would be diverted towards acting as his insurance cover would not be enough for his family to survive on after his demise.
Insurers nowadays offer a host of instruments for those like Rajesh, who is not just looking to increase their wealth in the long-term, but also planning for their retirement and searching for means with which to secure their family’s well-being after they are gone.
Term insurance benefits are all singularly focused on providing for the family after the policyholder’s demise, while the benefits of ULIP plans extend more in the direction of creation of wealth through investment across a portfolio of funds that cover equity funds, debt funds or even a mix of both. Read on to learn more about the advantages of term insurance, and how they differ significantly from the benefits of ULIP plans.
- The simplicity offered by term insurance is appealing for those looking for just the benefits of ensuring financial coverage for their family when they are no longer around. While a life insurance policy carries a host of riders and exclusions which must be carefully read through within the fine print on the policy documents, term insurance is a simple agreement for a fixed term that covers only death. The Future Generali Flexi Online Term Plan offers a life cover of Rs. 1 crore at only Rs. 16 a day, which can be paid out as a lump sum amount as a death benefit or can be dispensed as an income till the time the policyholder is alive.
- Term life insurance is cheaper as compared to conventional life insurance policies, which figure in other costs for other riders and benefits they provide. The advantages of term insurance arise mainly from the lower costs of premiums that are required to keep it going.
Term insurance benefits are multifold, including lower premiums for women. Clubbing this with a ULIP allows the policyholder to avail benefits of ULIP plans, which includes creating a corpus of wealth for their family long after the policyholder is no more.
Read on to learn the benefits of ULIP plans, as compared to term insurance.
- ULIP plans offer both insurance coverage and act as an investment instrument: Buying a ULIP plan provides policyholders with the dual benefit of investing across a portfolio of funds which cover equity funds which offer high returns but are highly risky, as well as debt funds which offer lower returns but are less dangerous too. Policyholders can easily switch between different funds to ensure they avail benefits of ULIP plans even if market forces appear dangerous at the time of investment.
- ULIP plans aid wealth creation for the policyholder’s family, even if the policyholder is no more. Through the different funds that the ULIP is invested in, a policyholder can create a significant enough corpus that will provide their family with a regular source of income even if they are no longer there.
While the benefits of ULIP plans are numerous, they are not enough to provide a suitable insurance cover to the policyholder’s family after the policyholder is no more. ULIP plans divide the premium paid between insurance and investment, which is why the insurance coverage may not be suitable to meet the family’s needs. However, combining a ULIP plan with term insurance allows policyholders to rest assured that their family will be taken off even after they are gone since they can avail dual benefits of ULIP plans as well as reap the advantages of term insurance.