Term Insurance 748 views December 22, 2020

A term insurance plan may not cross your mind if you are in your 20s and don’t have much responsibilities to take care of. But the lack of it at this age will raise your cost massively when you buy this insurance plan later. Not only that, but you could miss out on some benefits too. An early offtake of a term insurance plan, which offers financial protection to your family members if you die during the policy term, will help achieve your financial goals easily. Be it the child education and marriage, loan payment or any other financial goal, a term insurance plan will help accomplish all. Let’s read further and see how an early beginning could be a game-changer for you!

Term Insurance

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Benefits of Buying a Term Insurance Plan Early

Early buying of a term insurance plan comes with several benefits – lower premium, hassle-free approval, early coverage of dependents, more savings via tax benefits, etc. Let’s read about these benefits one after the other.

Lower Term Insurance Premium Amount

A lot of factors help insurers decide the premium of a term insurance plan of which age is one. The younger you are, the lesser are your chances of developing health-related complications. All this results in a lower premium for you as opposed to someone 10 years older than you. You could pay half the premium amount compared to the older candidate.

The Same Term Insurance Premium Amount Will Further Add to Your Savings

The best part about term insurance plans is that the premium amount remains the same throughout the policy term. And if you lock a term insurance deal early, the same premium amount will only add to your savings. Let’s check how. Suppose you are a 25-year old guy and want a term insurance cover of INR 1 crore. The insurance company wants you to pay an annual premium of INR 10,000 for 25 years. Someone else with an age of 35 years may have to pay an annual premium of INR 20,000 for 25 years. So, your overall premium outgo will be INR 2,50,000 as opposed to INR 5,00,000 that the other candidate will need to shell out.

So, if both of you will get the same coverage amount in the event of an unfortunate incident of death, why not take a term insurance plan early and boost your savings.

Term Insurance Acceptance Rate Will be Higher

Insurers often reject term insurance applications of individuals already caught with some illnesses. Even if they approve the application, you will need to pay a greater premium amount. So, if you take a term insurance plan early in your life, you may not have illnesses considering that one generally remains fit and healthy in their 20s. You will get a smooth approval as well as a wide cover at a much lower premium.

Tax Benefits are a Bonus

Term Life insurance comes with a slew of tax benefits for you to make the most of. The premium payment qualifies for tax deductions under Section 80C of the Income Tax Act, 1961. However, there is a condition that the premium payment should not be more than 10% of the Sum Assured for term insurance plans issued after April 1, 2012. Whereas the premium payment should not exceed 20% of the sum assured for policies issued before April 1, 2012. The maturity amount receivable by your nominees will be exempt from taxes if the sum assured is a minimum of 10 times the annual premium amount.

Employer Term Insurance Plan is not a Substitute for Individual Term Insurance Plan

You could argue over whether you require an individual term insurance plan when you have a group term plan from your employer. Being young professionals, you could say why we should pay for an unfortunate incident of death when our employer is doing it on our behalf. All these are pertinent arguments, but will you stick to your current employer throughout your life amid this marathon run of professional growth? Maybe not!

As soon as you leave your company, your group term plan will cease to exist, and in case something unfortunate happens after that, your family will have to bear all the financial hardships. Also, there’s not a guarantee that you will get a group term plan from the organization you join afterward. All that makes for an early offtake of a term insurance plan and stay tension-free thereafter. So, check different term insurance plans online and choose a policy with the highest sum assured at least premium.

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