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We list the reasons why those in their 20s must necessarily invest in term insurance.
Term insurance is a life insurance product that safeguards the financial interests of your loved ones in case you are absent in the future and unable to provide for them. The term insurance plan has some of the highest sum assured amounts across insurance products in India today. Leading insurance providers have also changed some of the basic tenets of traditional term insurance policies to accommodate different customer needs. It is the best safety net you can use to protect your family from any future financial problems.
It is also one of the most affordable life insurance solutions in the market. The premiums are extremely affordable, and almost anyone with a regular source of income can invest in them. Thus, you end up creating an essential safety net for your family by paying low amounts of money in the present. But do note that you if you outlive the plan tenure, none of the premiums paid are returned to you. Term insurance is a pure life insurance product only.
Benefits to buying term insurance in 20s:
Every person with family and other dependents must buy term insurance. It is the best way to protect the dreams and financial future of your loved ones in your absence.
As a 20-something working professional, you might think that you don’t need to buy life insurance at such a young age. But term insurance is highly recommended especially for your age group because:
- Term insurance premiums are much cheaper for your age bracket
Life Insurance providers are happy to extend term insurance policies to younger applicants. You are considered a healthier candidate with several more years of working life left in you. You will be offered cheaper premiums than a person who buys the same plan a decade later. And since the premiums don’t change, you will reap the benefit of lower premium till the end of the policy tern.
- You have dependents
Every person has at least one dependent, may be a parent or a younger sibling or an older ailing relative. Your monthly income helps to ease the lives of your loved ones. So if your income stops in your absence, they face financial hardship and insecurity. But the term insurance plan can pay household expenses, the education of younger siblings, medical costs of treating parents, etc. Also, nominees can be changed later on. It is advisable to buy a term insurance plan as early as possible and then, in future change your nominee or increase life insurance coverage through top-ups to match your needs..
- You need not invest in a more expensive life insurance plan at this time
The insurance premiums for this category of life plans are quite low. Leading insurance providers like Aviva Life Insurance have the superb Aviva i-Term Smart term insurance plan that offers Rs 1 crore coverage at just Rs 17 per day! Thus, you don’t need to invest in more expensive policies at this stage of your life and have just a good term plan to cover your needs.
- You get tax benefits. The premiums paid under term insurance are tax exempt under Sec 80C of the IT Act, 1961.
Term insurance is one of those products that form a crucial component of your financial planning process and hence worth paying for – after all, it could prove to be a bargain over the long haul.