Generally, when you are young in your 20s or 30s, buying life insurance coverage may not be a part of your overall financial plan. At the start of your professional life, you are healthy with not many responsibilities, and you think you can delay buying life insurance until later.
In life, there is no certainty, and it is essential to buy a term insurance plan with higher coverage during your youth. Financial planning is important at an early age to strike a balance between fun and responsibility. Just like you plan for a contingency fund and your retirement corpus, similarly, it is crucial to purchase insurance during an early phase of life.
Here are five reasons for investing in a term plan at a young age:
- More affordable
The term plan premium depends on your age and health condition at the time of purchase. When you are younger, you are in the pink of your health and less likely to fall sick due to a critical ailment. However, the possibilities of suffering from certain diseases increase with age, which means the premium rises if you delay the purchase. Therefore, you can avail of a term plan at an economical rate when you are younger. You can use an online term insurance premium calculator to know the approximate cost.
- Higher coverage at a lower premium
Continuing from the previous point, the premium is fixed for the entire duration of your term policy. Usually, it is recommended you avail of a sum assured (SA), which is around 20 times your yearly income. If you fail to buy an online term plan at a young age, you will have to pay a greater premium later, thereby increasing your overall cost. Buying early ensures you can avail of higher coverage at a reasonable premium that remains constant during the entire policy tenure.
- Financial security for your loved ones
Predicting the future is impossible, and you never know when an unfortunate event may result in your sudden absence. If you are the only earning member in the family, your absence will leave them in a vulnerable situation. In your 20s, you may not have many dependents; however, as you age, your responsibilities increase. With time, you will marry, have a family, take a home loan or other loans, have dependent parents, and need to fulfill other obligations. Without term insurance, you leave your family financially unstable. You can reduce such a possibility by purchasing an online term plan when you are young.
- Tax benefits from an early age
Term insurance also provides various tax exemptions under the Income Tax Act, 1961. Firstly, an amount of up to INR 1.5 lakh paid as a premium is tax-deductible per year under Section 80C. Additionally, the policy benefits paid to your beneficiaries in your absence are tax-free as per Section 10(10D) of the Act. So, with these tax advantages, you can lower your liability and save a significant amount over the years.
- Lesser dependency on employer’s insurance
Some employers provide term insurance to their employees as an additional facility. It is beneficial to have such coverage. However, this insurance plan is insufficient to meet your family’s requirements. Moreover, the insurance is no longer available if you resign or lose your job, leaving your family in a financially challenging position. Therefore, it is advisable to buy an independent term plan so that you are not completely dependent on the employer’s insurance. You may want to wait to buy a separate term plan until you are in service; however, some insurers have a term insurance age limit, and you may not be eligible for procuring the coverage when you are older. Or, you may get it, but at a costlier premium.
The Coronavirus (COVID-19) pandemic that brought the entire globe to a standstill proved that life is full of uncertainties. Therefore, you need to start planning for your family’s safe monetary future at an early age. Buy an insurance plan today to lead a peaceful life. Use the term insurance premium calculator to know the estimated amount that you will have to pay for a particular sum assured.
