Why should you buy term insurance earlier in life?

Why should you buy term insurance earlier in life?

You never know what is there in the future for you because the future is uncertain, and so is life. Your life expectancy is unexpected; this very thought raises concerns about your family’s life without you. What if there is an option to protect them after you? What if you can do something today to give them a better tomorrow?

You can protect their interests by investing in a term insurance policy earlier in your life that will protect and support your loved ones financially and also provides you multiple benefits for investing earlier.

Why should you buy term insurance
Why should you buy term insurance

What is term insurance?

It is an insurance policy that provides coverage for a specified period. In case the policyholder passes away during the policy’s tenure, the family/nominee of the insured will receive a lump-sum amount; such amount is referred to as sum-assured.

However, if the insured is alive and the tenure of the policy passes away, either the policy will lapse, or the legal heirs of the insured will receive a lump sum amount (if the terms and conditions of the policy contain such clause). This is called maturity benefit, which is usually covered within the policy.

Why is an early investment in term insurance important?

Just like in a race, a good head start makes a whole lot of difference for those seeking to secure their future. It also provides you a sense of accomplishment of a bit of your responsibility towards your family at such an early stage. Also, a term plan not just takes care of your family after you but also includes a variety of additional benefits. Here are some of them of getting term insurance earlier in life:

  • Lower Premium Amounts
  • Covers Critical Illness
  • Tax Benefits
  • Large Cover
  • Family Security

For more information, read further about the reasons in detail.

Lower Premium Amounts:

In the case of term insurance, LESS AGE = LESS PREMIUM. As the insurance premium gets locked in when you buy the policy, you will be paying less premium for your life if it is secured earlier.

Different companies are offering different benefits with your term insurance policy. You can choose amongst different plans in regards to payment occurrence of premium to be monthly, quarterly, or annually. Here is an approximate calculation of the premium you need to pay for buying term insurance.

Term Insurance Yearly Premium at Different Life Stages

Coverage Amount Age Yearly Premium
₹1 crore 25 ₹8,000
₹1 crore 30 ₹10,000
₹1 crore 35 ₹15,000
₹1 crore 40 ₹20,000
₹1 crore 45 ₹30,000

Source: ET Money

Here is a comparison between Mr A and Mr B, Mr A bought Term insurance at the age of 25, having coverage till the age of 75, whereas Mr B bought the plan at the age of 35, having coverage till the age of 75, let’s have a look who paid more and how?

Total Premium Amount Paid For Buying Term Insurance At Different Life Stages

Age at which the plan was bought 25 35
Coverage amount ₹1 crore ₹1 crore
Coverage till the age of 75 75
Yearly premium amount ₹8,000 ₹15,000
Total premium amount ₹4 lakh ₹6 lakh

Source: ET Money

Covers Critical Illness: Term plans don’t just protect your family. They even provide cover against multiple critical illnesses. All it takes is an additional premium to get a lump sum amount when one first gets diagnosed for any critical health issue, be it cardiac arrest, cancer etc.

Nowadays, illnesses don’t just come knocking on the doors of the elderly. The younger population is known to be affected by a host of health concerns. When such conditions break out of the blue, it can throw off plans involving both present and future. For sake of yourself and your family, it is imperative to safeguard these interests with an adequate plan.

TAX BENEFITS:

If you are buying term insurance early in life, then you can enjoy tax benefits from the initial phase of your career. When your income crosses the tax bracket, you can avail of deductions and tax benefits under section 80C, 80D, 10(10D), and other sections as may be applicable.

Having these deductions since an early age will help you to save more tax over the years and also, in case of receipt of lump-sum amount, the payout will be exempted from tax, subject to the applicable provisions of the Act.

LARGE COVER AT LOW PREMIUMS:

If you are investing early in your life, the benefits will be multifold. Along with the low cost of the premium, you will be insured with a large cover. Suppose you are in your early or mid-30s, then you can purchase term insurance that covers approximately 20 times your annual income up to the age of 40 years.

With the increasing age, the premium will increase and the life cover will be decreasing. Hence it is advisable to invest at the start of your career.

FAMILY SECURITY:

A single source of income is never enough for middle-class individuals. You might have taken a loan for meeting your expenses, buying a car or home for your family, supporting your education, or any other contingencies. Having term insurance early in your life will also help you to cover the risk of repayment of a loan in case of any mishaps.

CONCLUSION:

Term insurance should be bought at an earlier stage in life to ease financial pressure and be better prepared for the future. It will be the wisest decision you made to date.

Finding these plans is a matter of clicks nowadays. Just look it up on Google and compare plans to understand which fit your needs the best. This research is key as everyone’s needs differ. Also, as someone rightly said, “You are not just buying term insurance; you are buying peace of mind.” Don’t cut corners in this matter and make a calculated decision to reap the most benefits.

Read more related posts:

What Is Term Life Insurance?

What is Term Insurance and Why Is It Important?

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