Is Term Insurance A Better Investment Option Than a Fixed deposit?
Fixed deposits are a type of investment. You may invest in fixed deposits for certain periods of time at your leisure and earn significant returns on your money when they mature. Banks often do not enable you to withdraw your funds before certain maturity date. You can, however, remove your fixed deposits with advance notice to the bank. You can invest for a minimum of 7 days up to a maximum of 10 years with these deposits.
Term life insurance, on the other hand, is an insurance plan that you purchase from a certain insurance provider/company by paying a set amount of money in premiums. When an insured person dies, a term insurance policy pays a certain amount to a selected individual. You may get these plans for various tenures depending on your needs.
Which Is Better for You: A Fixed Deposit or Term Insurance?
Fixed deposits are usually a superior investment alternative since they are specifically created for your investment and savings goals. It is recommended that you invest in fixed deposits if your goal is to save and invest for the future. Some of the primary distinctions between fixed deposits and term insurance are listed below.
What Is the Purpose of Purchasing?
Term insurance is an insurance product, whereas a fixed deposit is strictly an investment instrument. Term insurance is something you buy to protect your family in the event that you die. Investments help you save for the future, but term insurance is something you buy to protect your family in the event that you die.
Term Period
For short and medium-term investments, fixed deposits are appropriate. On the other hand, term insurance policies are best for long-term investments. Fixed deposits allow you to invest for as little as 7 days, unlike term insurance, which requires you to invest for at least 10 years.
Premiums
In bank fixed deposits, you can invest a minimum of Rs. 1000, however in term insurance, the minimum premium varies depending on the insured individual’s age, gender, policy duration, and premium payment condition.
Return Value
Fixed deposits provide predictable returns on investments, as stated at the outset when you start your account. Term insurance policies, on the other hand, are vulnerable to market risk. The value of the funds you get as a result of investing in these programs is influenced by market conditions.
Withdrawal
Fixed deposits and term insurance contracts both have the option of being withdrawn. You can withdraw your fixed deposits at any time by submitting a notification to your bank, but normal term insurance has a lock-in period of 3 to 5 years.
Take Away
Even though you do not receive a tax benefit for investing in fixed deposits, it is an excellent product to use if you want guaranteed returns on your money. A fixed deposit account may be the best option if you wish to earn money on a regular basis. The most popular investment option for older folks is a fixed deposit.
