• Webpages
  • Documents
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment

For Online Policy Purchase

(New and Ongoing Applications)

Branch Locator

For Existing Customers

(Issued Policy)

Fund Performance Check

Demystifying Traditional Term Plans

August 04, 2021

Everybody knows that life insurance is an absolute must. A good plan allows you to protect your family financially even if you’re no longer around. There are several traditional insurance plans available in the market. But, the most affordable plans are term insurance policies. These plans provide high life cover at relatively affordable premiums. Despite the benefits of term plans, many people shy away from making the purchase. Eventually, they leave their family without the financial protection they had hoped to give them. One of the main reasons why people avoid buying traditional insurance plans is because they do not understand the product. Many misconceptions and myths are floating about. So, to help you make the right choice, we’ve decided to demystify these plans for you.

Demystifying Traditional Insurance Plans

Myth 1: My Money Will Not Grow

Term plans do not offer any maturity benefits. So, if you outlive the policy, you do not receive any reward. While it’s true that your money will not grow, it does provide peace of mind. Remember, traditional insurance plans are meant to provide cover. Think of your term plan like your car insurance policy. You pay the premium regularly, but you don’t expect some large monetary reward if you do not make a claim. If you’re looking for a plan to invest your money, you could opt for something like a Unit-Linked Insurance Plan (ULIP) in addition to your term plan. Both policies provide life cover, ensuring your family will get more than enough financial support after you’re gone. The ULIP also helps you invest and grow your money in market instruments, but the premiums are much higher.

Myth 2: Term Insurance Is an Unnecessary Expense

This is categorically not true. A term insurance policy, like any traditional insurance plan, provides you with peace of mind at an incredibly affordable cost. You can get pans that offer a sum assured of INR 1 crore for less than INR 500 per month! It’s hardly anything to pay for the safety and security of your loved ones. While you can, you always do your best to look after your family and all their needs. With the right term plan, you can ensure that they do not struggle even if something happens to you. The payout from your policy will provide them with financial stability during the most difficult time of their life. You must remember that term policies have evolved in the recent past. Today, you can purchase a plan that offers to return your premiums. So, if you outlive the policy, you won’t feel like you’ve lost any money.

Myth 3: Other Investments Are Enough

When it comes to investments, it’s crucial to diversify and minimise your risk. While it’s good to have other options, you cannot rely solely on them to provide for your family members. Let’s say you have invested in mutual funds or fixed deposits. These kinds of investments are notoriously difficult to liquidate in an emergency. If you meet with a fatal accident tomorrow, your family members could be left in a lurch.

Myth 4: I Can Invest in Policies that Offer Life Cover and Maturity Benefits

Yes, traditional insurance plans and ULIP policies offer both life cover and maturity benefits. But, can you afford the cover you need? Generally speaking, people are told to opt for a life cover amount that is at least 10 to 15 times their annual income. They should also add on any kind of debt or financial liabilities to the amount. If you currently earn INR 10 lakhs a year and have a home loan of INR 80 lakhs, that works out to over INR 2 crores. Your premiums would skyrocket. Instead, you can opt for a traditional insurance plan with a lower sum insured amount and get the kind of cover you need under the term plan.

Traditional term insurance policies are not complicated. They’re possibly the simplest life insurance product available in the market. For a regular premium, you can get life cover for a specific period. If you opt for additional riders or pick a renewable or convertible plan, you can enjoy boosted cover and future benefits as well. If you want to rest easy knowing your family will always be looked after, make sure you get a term plan.

Purchasing a term plan is quick and easy for everybody, but especially for working women. Make sure you shop around and compare policies before buying the best one for your family’s future.Show Full Article
Hide Full Article

Investment Articles Investment Articles

HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.

Registered Office: Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Email: [email protected], Tel No: 1800-266-9777 (10 am to 7 pm). The name/letters “HDFC” in the name/logo of the company belongs to Housing Development Finance Corporation Limited (“HDFC Limited”) and is used by HDFC Life under an agreement entered into with HDFC Limited.

For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale.

  • IRDAI is not involved in activities like selling insurance policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.