Investing in a life insurance term plan should be your biggest priority, as it ensures the financial security of your loved ones even if you are no longer around. The substantial life cover that your will family will receive in case of an untoward incident will act as a replacement for your income. It can help your family to meet household expenses and medical costs as well as achieve their long-term financial objectives.
The importance of having a term policy is evident. However, millennials do not feel that it is necessary to invest in a life insurance plan. As they are unmarried and have lesser financial responsibilities,they consider purchasing term insurance a waste of money.However, it is essential to invest in a term plan, and purchasing it at an early age comes with many benefits. Here is why you should buy term insurance when you are young:
- Lower premium
The premium for term insurance plans in India is considerably low when you invest during an early phase of life. It is because young people are at a lower risk of having life-threatening diseases compared to older policyholders. The probability of having medical problems, like high blood pressure, diabetes, and heart ailments, is lesser among young individuals. So, considering all this, insurers charge a cost-effective premium. The primary reason for this is that the rate of mortality is significantly less in younger people. The premium increases with age.So, you can save a significant sum by investing early. For instance, a 25-year-old policyholder will have to pay little more thanINR 6,000 for a term plan with a sum assured worth INR 1 crore.However, a 30-year-old policyholder will have to shell out an additional INR 4,000, wherein the cost comes to around INR 10,000 for the same plan.
- Stagnant premium
When you invest in a term policy at an early age, the premium remains fixed throughout the plan’s tenure. For instance, if your age is 25, and you are paying a yearly premium of approximately INR 6,000 for an INR 1 crore term plan that provides you with cover for 30 years, your cost will be the same throughout this period. As you know that the premium rises with age, you will have to pay more if you invest at an older age. If you buy this policy at the age of 30, the annual premium may be INR 10,000. So, you will end up paying INR nearly INR 1.2 lakh extra (INR 4,000 multiplied by 30 years) for the same policy.
- Financialsecurity for your family
Investing in a term policy at a young age ensures that you are safeguarding the monetary safety of your loved ones early. Suppose your parents are dependent on your income and something untoward results in your untimely absence, the sum assured can help them to meet their day-to-day costs and medical expenses when they become old.Additionally, if you have taken a car loan or a bike loan, your parents can utilize the death benefits to repay the debt and avoid any financial burden.
- Tax exemptions
By investing in a term plan, you can avail of tax benefits from a young age. As per Section 80C of the Income Tax Act, 1961, the premium that you pay for your term plans is tax-exempt up to INR 1.5 lakh a year. Moreover, the death benefits that your nominees will receive are tax-free under Section 10(10) of the Act.
You will consider investing in term insurance plans in Indiaeventually in your life. So, do not delay the purchase. Invest early and avail of its benefits from a younger age.