Is Buying Term Insurance an Investment or Expense?

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When we think about investing our hard-earned money, we automatically tend to calculate the returns in our mind that we can gain through different investment avenues.

So, where does term life insurance stand with other investments such as equities, mutual funds, etc? Well, keeping term insurance in the same category as other investment options would not be fair, considering the sole aim to buy term insurance is the “Protection. The term insurance policy does not offer monetary benefits. That is why, few people become skeptical at the time of buying term life insurance as all they consider that they are investing their hard-earned money and not getting any monetary benefits in return.

But in this article, we will explain to you that how buying a term life insurance plan is an investment, not an expense.

What is Term Life Insurance?

Well, term insurance is a type of life insurance policy that offers financial coverage for a certain period of time and charges a small amount as an insurance premium. This type of insurance policy does not provide any survival/maturity benefits and also it doesn’t promise returns at regular intervals. So, you might be wondering then how buying term insurance is an investment but not an expense.

While it is true that a term insurance plan doesn’t offer any maturity benefits or returns, the term plan does offer a very important benefit i.e. it covers your life.

In the unfortunate event that the life assured (the person on whose life the term plan is taken) passes away during the tenure of the term insurance policy, then it will pay out the sum assured as a death benefit to the insured’s family members who are listed in the policy. So, when you buy term plan, you are investing in protecting your loved one’s future financially and ensuring that your dependents can easily cope with financial liabilities in an event of your untimely death.

How Does Term Plan Work?

When you buy term insurance, you pay some specific amount of money to the life insurance company regularly which is called as ‘premium’. Over time, the insurer accumulates these premiums and uses this amount to offer financial security to your dependents in an event of your untimely demise.

How is Term Life Insurance a Worthwhile Investment?

The main reason behind buying a term life insurance policy is that you are financially protecting your dependents financially in the event you are no longer in this world.

Life is uncertain and we can’t predict what will happen in the next moment. With an adequate term life insurance policy, you can assure that your loved ones will not have to confront any sort of financial distress since the sum assured from the term insurance policy will be sufficient to take care of their basic financial requirements.

The life insurance company does not put any restriction on how your family members can use the amount as it is completely up to your loved ones. They can use the amount to cover burial expenditures, home loan repayment, living expenses, marriage, school or college fees for children, or any other personal purpose as per their need and convenience.

Also, term life insurance is less expensive when compared to other life insurance policies so you can easily afford this pocket-friendly insurance. Also, it ensures financial stability and security to your loved ones in your absence. By considering all these factors, we can confidently say that term life insurance is definitely a worthwhile investment.


You can buy term insurance without giving a second thought as peace of mind, financial security, and convenience that it offers in your absence makes it an important investment that you need to protect your loved one’s future.

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