Why Is It Advisable to Buy Term Insurance Plan Before Age of 30 in India

What is the right age to buy term insurance? Why do experts recommend to buy term insurance plan before age of 30? Those looking to buy term insurance tend to ask such questions as they seek to secure their family’s future by ensuring them a financial cover in the long run. Death of a loved one not only causes grief; there is also a looming sense of economic crisis due to loss of income. Having a term insurance plan in place helps protect and preserve your family against any such possible monetary crunch.

Buy Term Insurance Plan Before Age of 30

The entry age that insurance companies have mandated to buy an insurance policy is 18 years. Though one can buy a term insurance policy at any age, buying the best term insurance policy plan that suits your requirements early helps. Below mentioned are reasons that help explain why it is advisable to buy term insurance by the time you turn 30 years of age.

1. Cover the risk of dying early

Once you have started earning, you feel inclined to make necessary investments that will yield high returns and help you create a necessary corpus for your retirement. For this, you may decide to allocate a percentage of your income towards stocks, mutual funds, gold bonds, recurring deposits, etc. While this may be a planned effort towards the creation of wealth, these ways do not protect your loved ones against the risk of your sudden death. The host of investments that you would create while you live will show returns only after a certain period, which means that your family remains deprived of the basic financial cover necessary for survival. However, paying for a term insurance plan ensures that the family receives a certain amount of sum assured to replace the sudden loss of income owing to unfortunate circumstances. You may consider term insurance as a risk-free investment that guarantees peace of mind in times of sudden crisis.

2. Buying early means paying lower premiums

Insurers charge premiums according to the quantum of risk they have to cover. Policyholders, aged 30 years old, suffer from the low risk of being afflicted with health problems. Even the use of substances like cigarettes or alcohol is less likely to affect their health adversely, thus, ensuring lower premium charges. For example, a 30-year-old non-smoker male will have to pay as low as Rs 552 every month towards seeking a life cover of nearly Rs 1 crore. However, a 40-year-old non-smoker male will have to shell out nearly Rs 1400 a month while buying a term insurance plan with the same amount of coverage. Also, some insurance companies may require you to go through a medical checkup before buying term insurance. The chances of rejection of the term insurance proposal owing to a diagnosis of some lifestyle-related disease are higher as you approach 40 years of age.

3. Fixed premiums

Health insurance policies beget increasing premium rates each year with advancing age. The premiums on term insurance plans when bought early are low and continue to be fixed over the entire policy period.

4. A tax saving measure

When you earn, you have to pay taxes. Buying a term insurance plan also helps save on taxes. Not only are the premiums that you pay towards buying a term policy eligible for tax deduction under Section 80C of the Income Tax Act, but the amount received as death benefits is exempt from tax, thus, relieving your loved ones from the burden of the tax deduction on the insurance amount received.

5. A long-term cover for your family

The burden of living can be high due to rising expenses, and paying for a term plan early in life enables your nominee(s) to pay off existing loans and liabilities with the amount of sum assured. It is important to opt for a long policy period so that the purpose for which the term insurance policy was originally bought is served. The insurance amount that your family would receive would make good for the loss of your income and help finance their treatment expenses, educational costs, and other necessary expenditure.