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Which life insurance to buy?

Here are some important points to keep in mind while choosing an insurance policy

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The premium paid towards life insurance also come under Section 80C. Life insurance policies come in many forms. But the best is term insurance. Term insurance provides you a large cover at low premiums.

Term insurance is different from endowment and unit linked policies (ULIPs). Endowment and unit linked policies are also savings plans and the premiums paid towards them are accumulated over time. In case of ULIPs, the premiums are invested in the stock market. On the other hand, while term insurance provides a large cover, you don't get your premiums back. This makes many investors think that endowment policies and ULIPs are better than term plans. That's not the case though.

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The primary function of insurance is to provide protection. The insurance products that double up as investments fail to provide both - the insurance cover is inadequate and the investment returns are disappointing. Therefore, as a general rule, don't mix insurance and investment. For investments, buy pure investment products. For protection, buy pure insurance products.

The table below lists the best term insurance plans, along with their features.

Life insurance isn't meant for everyone. It is meant only for those who have financial dependents. Non earning members do not need life insurance. Many parents buy life insurance for their children. While buying life insurance for your kids is emotionally appealing, it does not have any financial logic. Since parents are not financially dependent on their children, they should not buy insurance for their children. Rather, they should buy it for themselves.

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