A suitable investment plan is necessary to help you meet your financial goals
New Delhi [India], November 19: When building an investment portfolio, understanding the roles of market returns and term insurance is crucial. Grasping their differences enables you to comprehend the advantages and disadvantages you would face in your investment journey. Besides, based on your financial objectives, you can choose the one that helps you fulfil your aspirations.
If you are someone who is planning to invest to meet financial goals, read on to learn the differences between term insurance and market returns to help you optimise your investment plans.
How is Term Insurance Different from Market Returns?
Term insurance is a type of life insurance product that provides you with financial security for a predetermined tenure. It is one of the most affordable life insurance policies, where the policyholder pays premiums to get a large life cover.
In case of your untimely demise within the tenure, your dependents will receive a lump sum as the death benefit. This payout will enable them to fulfil their daily expenses and other financial commitments. Investing in term insurance plans ensures comprehensive financial protection for your dependents. Additionally, you can avail yourself of tax benefits under Section 80C of the Income Tax Act.
On the other hand, market returns simply refer to the value you earned after your investment over time. These are typically associated with investments in the stock market, mutual funds, bonds, etc. Market return can be positive, which means you have made a profit on your investment. However, it can also be negative, resulting in a loss of investment. Besides, market returns can include dividends, interest payments, and stock price changes.