Financial PlanTerm Plan

Invest Your Increment in a Term Plan

Term plan

Salaried individuals are among the privileged lot. According to experts, employees in India may get an average salary hike ranging from nine to 12 percent during this financial year. The high performers can expect an even higher hike, which could be as much as 15 percent. This is a good bounce back, given that business growth had slightly slowed down due to the implementation of Goods and Service Tax (GST) last year, and due to demonetization the year before that.

If you are one of those individuals expecting an increment this year, you may be looking for top investment avenues to put in your hard-earned money. Keeping surplus money in cash is not recommended, as it does not provide any returns. You may, therefore, channel the appraised amount systematically in instruments that generate good returns.

Out of the numerous options available in the market, a term insurance policy is one of the best financial vehicles. Such a policy offers financial security against uncertain events such as death. In an event of a premature death of the policyholder within the tenure of the plan, the beneficiary is entitled to receive the pre-determined sum assured amount.

Following are four reasons you may consider investing your increment in a term insurance policy.

  1. Enjoy financial security

Term plans offer peace of mind, as you know that your family’s needs will be taken care of even in your absence. The sum assured may be utilized towards fulfilling their lifestyle needs as well as their life goals and obligations. The amount may be used to fund your child’s future education, his/her wedding expenses, repayment of an existing debt, or for your partner’s golden years. Such a plan, therefore, acts as a safety net as well as an income replacement.

  1. Reap the benefits of an early investment

You may buy term plan early as the premium rates are lower when you are younger. Insurance providers consider younger individuals as low-risk and hence offer lower premium rates. Though you may invest in a term plan in the older stages of life, the premium amount will be higher.

  1. Enjoy affordable premiums

Term insurance is known as ‘value for money’ as it offers a high degree of cover at an affordable rate. Term insurance policies have the lowest premium cost as compared to other types of life insurance. The entire premium amount is used towards covering risk and not for investment. Such a type of life insurance is, therefore, an excellent option for those looking for a pure life cover.

  1. Reduce your tax liability

In case you are looking to invest your increment in a tax-friendly option, a term plan is an ideal choice. The premiums paid towards your term plan are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. You may claim tax benefits up to INR 1.5 lakh under this section. Moreover, you may enjoy tax advantages under Section 80D if you have opted for term insurance with maturity benefits. The death benefit amount, too, is eligible for tax deduction under Section 10D.

The increment that you receive from your workplace can act as a gateway to a better and financially secure life for your loved ones. You may consider the aforementioned benefits of a term plan and invest in one at the earliest. You may either visit your local branch or buy an online term plan, as per your convenience.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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