Term Insurance - Better Than FD
Table of Contents
Fixed deposits are investment products. You can invest in fixed deposits for fixed tenures as per your convenience and get attractive returns on your investments at maturity. Normally, banks do not allow you to withdraw your deposits before a given maturity date. But, with prior notification to the bank, you can withdraw your fixed deposits. These deposits allow you to invest for a minimum period of 7 days to a maximum period of 10 years.
On the other hand, term insurance is an insurance product which you buy from a particular insurance provider/company by paying a specific amount of money as premiums. A term insurance policy provides an assured amount of sum to a nominated individual upon the death of the insured person. term insurance policies are normally divided into two types - whole term insurance and term term insurance policies. You can buy these policies for different tenures based on your requirements. Not only do these policies provide risk coverage, you can also use these policies to pay off your medical bills, fund children's education and plan for your retirement.
Fixed Deposit Vs Term Insurance - Which Is Best For You?
Fixed deposit is always a better option to invest as it is purely designed for your investment and savings related needs. If your intention is to save and invest for the future, it is advisable you invest in fixed deposits. Listed below are some of the major differences between fixed deposits and term insurance.
- Fixed deposit is a purely investment product whereas term insurance is an insurance product. Investment is something that helps you save for the future whereas insurance is something which you purchase for risk protection and protect your family in our absence.
- Fixed deposits are best for both short and medium term investments whereas term insurance plans are designed for long term investments. You can invest for a period of as low as 7 days in fixed deposits unlike a term insurance plan wherein you need to invest for at least 10 years.
- You can invest a minimum amount of Rs. 1000 in bank fixed deposits whereas in case of term insurance, the minimum premium is different for different plans based on the insured individual's age, gender, policy term and premium payment condition.
- Fixed deposits offer fixed returns on investments and it is mentioned in the beginning when you open your deposit. But, investment in Unit Linked Life Insurance Plans is subject to market risk. The fund value you receive by investing in these plans are affected by the prevailing market condition.
- Fixed deposits add to your habit of savings whereas term insurance plans are purchased out of caring and fear that your near and dear ones may face some risks in future.
- Both fixed deposits and term insurance policies can be withdrawn. You can withdraw your fixed deposits at any time by sending a notification to your concerned bank whereas a lock in period of 3 and 5 years is application to regular term insurance and ULIP plans respectively.
Conclusion
Even if you don't get any tax benefit for investing in fixed deposits, it is an ideal product to invest in if you want to get fixed returns on your investments. So, if you want to earn on a regular basis, a fixed deposit account can be the perfect choice. Invest in fixed deposits and get income in the form of interest. Fixed deposit is the most preferred choice of investment among senior citizens.
Also read: All About Postal Life Insurance Premium Calculator Explained
