Why Investing in Term Insurance is a Great Choice if You’re Still Under 30
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With the onset of the new financial year, a whole new world of opportunities opens up for young, “under 30” salaried individuals. With additional cash in account in the form of performance bonus and others, there is so much one can do. While some may want to splurge their money on compulsive buying, the smarter individuals would rather spend on fulfilling rewards such as investing in the financial security of their family.
Many experts are of the opinion that at least a major chunk of the net bonus (say around 70%) should be utilized in creating an emergency fund. With numerous investment options available in the market, you should use your increment to secure the financial future of your family. One of the most sensible and secure ways to do this is by investing in a term plan.
A term insurance plan not only acts as a safety net for your family in adverse situations but can also be highly beneficial. Designed primarily with the intention of offering coverage against the risk of death, some terms plans may also offer you additional coverage such as spouse cover, disability cover, and so on. If you’re young and in your 20s, then pay attention as we give you six good reasons to invest in a Term Insurance plan early on in your life.
Purchasing Term Plan early is less expensive
If you understand how the insurance system works, you would be aware that the sooner you invest, the lesser it costs. This is because of the fewer risks involved when you are healthy and young. As and when you get older, you tend to become susceptible to medical conditions.
So, even if the sum assured remains the same in the coverage, the rate of premiums increase as you tend to grow older. When you are younger you pay fewer premiums. Young working professionals should invest in a term plan at an early stage in their life as soon as they become financially independent. With growth in their professional careers, the savings will only tend to increase.
Term insurance promises a high level of sum assured at easy affordable premiums. For example, a 26-year old non-smoker male can get a coverage worth Rs. 1 crore for 30 years at a monthly premium of less than ₹800. Eating out at a restaurant with your family would be more expensive in comparison to this! To sum up, the younger you are, the less premium you will have to pay.
Promises peace of mind
Insurance is more about availing financial protection from life’s uncertainties. A term plan promises that in case of any tragedy, the financial needs of your family would be met. This would have a positive impact on the quality of your life too regardless of you being married or not.
Serves as an expense manager
If you are the sole breadwinner of your family, then a term insurance plan would offer them the stability to fulfill all their monetary obligations in your absence. It would easily cover all your unpaid loans that you may leave behind. This would spare your loved ones the burden of debt.
Promises Tax Benefits
A term insurance policy qualifies you for tax benefits under sections 10D, 80D and 80C of the Income Tax Act. This implies that premiums up to 1.5 lakh per annum are exempted from taxes. The maturity amount you receive is also exempted from taxes. Tax benefit offered by a term plan can help working professionals save a major chunk of their hard earned money ending up being deducted in the form of taxes.
Flexible in Securing Your Family’s Future
A term insurance is more of a pure risk cover. One could also consider it to be a death benefit plan. Since a term plan is more of an insurance without any savings or investment component, the premiums are lesser than any other life insurance products. Thus, you are offered a high amount of coverage at very low premiums.
Also, if you choose, you can stop paying the premiums to cease the policy cover, and not be liable to pay any more premiums. This is unlike life insurance, where you are expected to pay the premiums till the end of the policy in order to enjoy the savings.
The importance of term insurance can never be stressed enough, especially if you’re young. Not only is it a vital investment that would enhance your portfolio, but would also improve the quality of your family’s life significantly. Investing in a term insurance being a young adult would be one of the wisest investing decisions you could ever make.