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TERM INSURANCE

How insurance needs change at every stage of life?

Karan Sharma Karan Sharma 27 May 2019

What are the different reasons to buy a life insurance policy? Get all the answers in the following article.

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When you are young and have recently started working, there is no such dire need of an insurance plan. You can still go for one in case you have dependents. However, in order to protect yourself from personal accident and permanent disability, you should buy a life insurance policy. Another advantage of buying a life insurance policy at a young age is low cost of premiums. But it is not always possible for every individual to purchase a life insurance plan at a young age. The good news is, you can purchase a life insurance policy at any stage of life.

To help you understand better, we have created examples which will help you determine the right policy as per your given age.

When you are 25 years old:

This stage is the beginning of your career with minimum liabilities. The primary purpose of purchasing a life insurance plan is to help save taxes on the newly earned salary. Accidents and death are still a long way and life insurance is like the last thing on your mind. The biggest benefit of buying an insurance plan at a young age is less cost of premiums. Yes, insurance companies assume the fact that you are young, restless with decent savings and healthy. This automatically implies a lesser possibility of death. This, in fact, is also the reason why premium rates are directly linked to your age. For example, you will have to pay an annual premium of ₹2800 for a regular premium online term plan for 30 years with ₹10 lakhs sum assured. If you select the same plan at the age of 35 years, you will have to shell out close to ₹5100 per year.

When you are 30 to 35 years old:

This is the stage of responsibilities and obligations. You have successfully entered the world of marriage, kids, mid-life crisis, job switch, promotion, home and auto loan. All of the things mentioned above require adequate financial planning. Also, your life situation can get difficult in case you are the sole breadwinner. Your family is more or less completely dependent on you. If anything were to happen to you, it will create financial distress in the lives of the spouse and kids. They will need to look for an alternate source of income in case of your untimely death. This is the primary reason for buying an insurance plan at this stage. Many plans come with guaranteed returns in the form of income replacement option, rider add-ons such as accidental death cover, permanent disability cover, etc. With an income replacement option, your entire family will be entitled to monthly income post your demise. In short, you must buy an insurance plan at this stage of life.

When you are 40 years old:

This is a stage where you are burdened with financial obligations and savings. Your auto loan might have been cleared, but the cost of higher education for your children has not declined. You are clearly in the middle stage of your life where you might suffer from some ailment or another. Considering the fact that your financial plans have been successful, you will still require adequate savings for a stress-free future. One good option is that you can purchase a whole life insurance plan. A whole life insurance plan offers lifelong coverage. At this stage, a life insurance policy is extremely important to your financial and investment portfolio. You need to leave a legacy for your children. Given the fact that they have reached an important milestone in their lives, they might decide to study abroad. Inflation will definitely have an impact on your earnings. All of the scenarios mentioned above can be easily avoided with a comprehensive life insurance policy.

When you are 50 years old:

At last, a stage where you need to look forward to a successful retired life. Once you have finally taken care of your children, it is time to think about your future and health. This is also a stage of insecurity as you have lived most of your life and are reflecting back on the decisions made earlier in life. You might be thinking about living with your grown-up kids. This will make you dependent on them and there might be a chance where you will have to compromise on certain things. This will make you feel bad as you are accustomed to a standard of living. The simplest way to avoid this situation is to make sure that you and your spouse are financially independent. You can secure your retirement goals by purchasing a life insurance plan with a critical illness option. Under this option, the life insurance policy comes with waiver of all future premiums and lump sum payout upon diagnosis of any of the 34 critical illness listed in the policy. This is a really helpful plan as you are old and susceptible to diseases and illness. Also, it will ensure that your spouse is taken care of, in case of your untimely death.

Conclusion

Your loved ones are precious. You do not want to see them suffer. Given the rising cost of living, along with inflation, it is of utmost importance that every individual insures their own life and family with some kind of financial protection. Financial protection is like a predecessor to sound financial planning. Just like your savings, building an emergency fund at every stage of life is equally important. If you plan properly, not only can you avail financial protection, but also increase savings along with wealth creation. Yes, all of this is possible with a life insurance plan. New generation life insurance plans are different from traditional plans. A life insurance plan can serve multiple purposes. From monetary relief to financial protection, guaranteed additions to rider add-ons, one can avail all benefits for a secure and stress free life.

Karan Sharma
Written by Karan Sharma
Content Specialist and Strategist, foolishly creative and always ready for a game of 'Call of Duty'.