Authored by – Mr. Rakesh Goyal, Director, Probus Insurance Broker
It has been a common belief among individuals who are in their 20s or 30s that they do not need a term plan as they are young enough and need to focus on growing their income rather than saving it. However, this popular belief is incorrect as buying a term insurance plan at an early age is not just important but also beneficial in many different ways.
Individuals during these ages go through numerous life changes. Many of them get married, while others invest in properties, some may even plan to grow their family while other might experience a sudden uplift in their career. Having said that, the responsibilities or number of dependents might also increase as this is the time when the parents grow older too. Moreover, the sudden outbreak of the pandemic has been strong evidence of the need for such kind of plans. Buying a term insurance plan at this age might not seem a priority at the beginning, but it is going to save you from numerous uncertainties and keep you financially equipped to deal with them. The informed financial decisions made at an early age by opting for an optimum term plan can ensure a secure future for the insured and
their family in the future.
In this article, we will be looking at some of the top 5 reasons why one should be considering buying the term insurance plan at an early age.
Reason 1: Provides More Scope for Other Investment
Investing early in a term insurance plan ensures you are secured in less. Therefore, it provides you a window to invest in multiple lucrative options when you grow older without having to worry about the increased premium rates (which otherwise would be the case if the insured plans to opt for it at an older age). Moreover, if you are already covered with a term plan from an early age, it means you have already overcome major financial responsibilities and can lead a stress-free life later.
Reason 2: Reduced Premium Rates
Another significant perk of opting for a term plan at an early age is comparatively lower premium rates. This is because the cost of the premiums is lower during the early period as the risk of health issues is lower. Since the risks are higher at older ages, the premiums are comparatively on the higher end and might even require medical check-ups after a specific period.
Reason 3: Tax Advantages
Your early age would witness a rise in your professional career if you perform well in your job. This also lights the welcome of heavy taxation. Opting for a term insurance plan can be one such cognizant way to save on taxes owing to the multiple tax benefits it offers. One can claim a deduction under Section 80C (up to 1.5 lakhs for specific purchases or investments) or Section 80D (if opted for any health-related riders). The nominee can also make claims under Section 10 (10D) in case of the policyholder’s death.
Reason 4: Boosts Protection Cover
Riders are one such appealing feature that can help enhance your term protection cover when some additional amount is been paid. Some of the every day riders that can save you considerable money during emergencies include critical illness benefits, accidental death benefits, waiver of premium, etc. Some of these riders are pretty helpful and necessary to provide the required financial protection during unfortunate situations.
Reason 5: More than Employer Offered Term Plan
Apart from the above-mentioned benefits, having a term plan in addition to the plan offered by your employer can be beneficial as the coverage offered by them would not be helpful at the later stage of life owing to inflation or increased need at an older age. Also, switching to a new company may result in losing the benefit of the previous company.
It is highly recommended to check the various plans/insurers available online and opt for the one which suits you the best. Moreover, check for the inclusions, exclusions, and other benefits or features that the plan offers. Make sure you research and analyze the different riders (if you are planning to opt for one) and include the one which could be helpful for you.