Buying a term insurance plan at a younger age comes with its own benefits. Read on to know why you must buy term insurance before turning 25 years of age.
You finished college a couple of years back.
You’re trying to settle into your first job, maybe in a new city. You’ve started earning a few thousand, but you know you’ll make it big. Perhaps, you’ll apply for a professional course three years down the line.
Probably you’re looking to buy a bike or a scooter to commute easily. But right now, you are independent, happily single and in no mood to mingle. Besides, your salary is your money, you don’t have too many responsibilities.
At this time when you are living your life to the fullest, insurance would be the last thing that you would even think about. Term insurance is not your agenda that you need right away.
But, the writer in me triggered to let my thoughts out, to make you understand the benefits of buying it earlier. So, read on to know why you must buy a term insurance plan before you 25.
Reasons to Buy a Term Insurance Plan before turning 25
Younger is Cheaper
If you think buying a term insurance before you turn 25 is too early, you are WRONG! While you are young, you are luckily healthy and far away from chronic or any critical disorders. So, your premiums for a term insurance plan too would be lower at a younger age. Plus, being healthy is an added benefit! If you wait to turn 30 to buy a term insurance plan, you would end up paying a higher premium. For instance, if you are a 24 year’s old, non-smoker, you would pay a premium as low as Rs. 541 per month for a 1 crore cover! But, if you wait until your mid-30s, you would typically end up paying a premium of Rs. 1,080 per month for the same cover of 1 crore!
Now, isn’t that a huge difference?
Applying early for a term insurance plan would also help you skip the major setback that you would otherwise have to undergo. Yes, the medical check-up. Since you are young, your body has not yet got attracted to any lifestyle disorders. So, the chances of your term insurance policy getting rejected are minimal.
It is quite flexible
At 25 years, you are still confused regarding your financial life. So, if some day you don’t wish to continue with your term insurance plan, you can stop paying the premiums. By doing so, your policy would cease and finally come to an end. You are not liable for any payments since, the element of savings here is zero. Whereas, the insurance policies that holds cash value, would give you the promised survival benefit, if they are held for the entire tenure.
Here, if you discontinue paying the premiums suddenly, you would face a financial loss. This is because you would be eligible get your complete savings only after certain deductions. There are certain term insurance plans that are convertible and renewable too. So, with flexibility at your mercy, you can certainly think to buy a term plan before you turn 25!
Most recommended financial product
You have seen your elder siblings taking consultation from financial advisors to invest smartly. So, do you.. SIPs, mutual funds, pension plans or probably life insurance plans might wreck your head. But, the idea to invest smartly is to have a tension free and risk free retirement. Most of the financial advisors wouldn’t recommend you to buy a term insurance plan. Because logically, term insurance is a pure protection plan. They help you solve the risks of death. It offers a financial security to your family, in your absence.
The best part is term insurance plans are quite cheaper than any other life insurance products. Most of the financial advisors give you the option to cover yourself up to 20 times your annual income! For instance, a 23 years old non-smoker male, drawing a salary of 4 lakh p.a. could buy a term insurance cover of 90 lakhs for as low as Rs. 528 per month. What else do you want?
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Dealing with your loans
You recently gifted yourself a brand new bike. The EMI’s for the bike loan would get debited for the next 5 years from your salary. Between this, if something unforeseen happens, your family would be the one to deal with this. Term insurance would look after your financial liabilities once you are gone. Set your family free from your financial crisis, while they have already dealt with your loss.
Your premiums are locked
A health insurance plan makes you pay an increasing premium each year. But, a term insurance plan would keep your premiums unchanged even with increasing age. So which means, term insurance provides you with the lowest premium for the rest of your policy period. Waiting to buy a term plan in your 30s, wouldn’t make sense. So, buy now because this is the best time to cover all your loans and liabilities.
Best tax-saving instrument
Who doesn’t wish to see the entire salary getting credited without any tax deductions? For which, you look out for different options to invest and save on your income tax. The premiums that you pay towards your term insurance would be eligible for tax benefits under Section 80C. The proceeds that your family receives as a death benefit is again tax-free under Section 10 (10D), under the Income Tax Act.
Not good to depend on your employer
It feel’s nice when your employer cares about you and your family’s future. But, you can’t rely on the term insurance plans offered by your organization. You are still at the beginning of your career in your mid-20s. Career growth and better opportunities are your goals. But, switching jobs for this purpose would terminate your insurance plans with your current employer. So, it’s better to invest in a term insurance plan individually to cover the death risk to your family.
Want to get started?
Being a young adult and at the start of your career, investing in a term insurance would be a wise decision you ever made. Though death is unavoidable, term insurance can get you peace of mind to secure your family financially. Getting into a healthier financial life before you turn 25, would be the stepping stone to responsibilities.