As soon as most of us begin earning in our 20s, we youngsters, whether millennials or Gen Z, are bombarded with not just one or two, but tons of financial advice from our friends, family and colleagues, right?
But what about our YOLO (You only live once) motto? How can we start implementing tons of advice when we actually want to first enjoy the newfound wings of independence??
Although it's natural to think this way, one piece of advice that you just cannot afford to ignore is getting your family insured through?term life insurance.
I am sure this pandemic has been a big enough wake-up call to make us realize that uncertainty is the only uncertainty in life, right??
So how can you live peacefully when the risk of leaving our loved ones in a financially vulnerable state in our absence looms over us? How can we let our family¡¯s financial life be jeopardized in case of our untimely demise?
That's exactly why it makes sense to buy adequate term insurance early on in your career.?
Assuming that most of us youngsters tend to begin earning either after graduating around the age of 21-22 or after post-graduating by the age of around 24-25, we should ideally aim to purchase term insurance as soon as possible, at least before we turn 30 and/or take further steps towards more responsibilities in life.
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If you are amongst the ones procrastinating this decision of taking term life insurance or if it sits at the bottom of your priority list, then pause, hit the refresh button in your mind and read this.
The biggest advantage of buying term insurance as early as possible is the low premium!?
Simply put, the earlier you buy it, the lower your premium will be. Whereas the more you delay, the higher you end up paying as premium. This is primarily because at a younger age, you are likely to possess a lower risk of health-related issues, which reduces the risk for the insurance company.?
Moreover, young people are expected to opt for longer policy coverage and premium payment term, which in itself implies more revenue for insurers, hence, leading to cheaper premiums for young policyholders.
Click here to know the factors that affect your term life insurance premium.
Once you buy a term policy, the premium amount is locked throughout the policy tenure, whether it's for 10 years, 20 years or even 50 years. So, buying the term insurance early implies saving a big amount of money over a period of time!
For example, a Delhi based 25-year-old woman (non-tobacco consumer) can get ?50 lakh cover insuring her till the age of say, 60, for an annual premium of around ?4,000. So, for the policy tenure and payment term of 35 years, you pay approximately ?1.40 lakh as premium for that ? 50 lakh insurance cover. Whereas a 35-year-old would have to pay close to ?6,000 annually for the same cover amount for the same tenure of next 35 years, i.e. till the age of 70, i.e. totalling approximately ?2.1 lakh.?
So, for being covered for the same tenure of 35 years and the same cover of ?50 lakh, the one who buys it earlier pays a lower premium and saves on the total premium paid too!
Now, given that your cover amount depends on your annual income, you might think that you would end up with lower cover if you purchase the term insurance policy early on in your career when you are likely to have a relatively lower income.?
Here it is important to remember that not only will you have to pay a higher premium the more you delay, but also that in order to fetch a higher cover according to a rise in income in later years, you have the options like opting for an increasing cover term plan wherein the insurance cover keeps increasing every year or at certain intervals or life stages, or going for another term insurance later with higher cover when eligible.?
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The earlier you purchase the term insurance to secure your family¡¯s financial life, the better it will be for your mental health as well, as you get relieved from the stress of leaving your loved ones financially unstable in case of your untimely demise.?
Whereas waiting for the ¡®right time¡¯ and procrastinating the term life insurance decision will leave your family financially vulnerable, and they might have to face financial hardships, from handling day-to-day expenses, children¡¯s education/marriage, ongoing EMIs to retirement corpus etc.?
So. Why not live stress-free by getting your parents, spouse and/or children covered under the term insurance as early as possible. In case of your unfortunate demise, at least that cover amount, which should ideally be a minimum of 15-20 times your annual income, would help in steading their financial life in your absence.?
Else, they are likely to come under tremendous financial pressure and their financial future could be jeopardized in the absence of the financial assistance that term insurance cover would have provided them with.
Also Read:?7 Benefits Of Buying Health Insurance Right Away
Who doesn't wish to lower their income tax outgo? Surely every taxpayer does. And to provide an impetus for people to take life insurance seriously and purchase it, the government provides tax benefits on the same.?
Firstly, the premium payment of term insurance can be claimed as tax deduction under Section 80C of the Income Tax Act, upto the maximum limit of ?1.5 lakh per financial year.?
And that's not all. Under Section 10 (10D), the nominee can claim this tax benefit when claiming the cover amount in the form of sum assured in case of the policy maturity or the death of the policyholder. This entire amount is completely exempted from taxes whenever the beneficiary receives it.
By now, we all must be agreeing that none of us would ever want our family and loved ones to financially suffer just because we remained reluctant towards the decision of purchasing an adequate term life insurance timely, and instead kept on delaying it for later.?
If you are still in two minds?or thinking if you should opt for some other life insurance product, keep in mind that term insurance provides a high sum assured at low premiums, involves multiple sum payout options, the increasing life cover option, and the facility to include add on benefits.?
Moreover, besides the tax benefits for you as a policyholder, even the cover amount received by your dependents/nominees is also totally exempt from tax under section 10(10) D. Keeping all this in mind, coupled with the other key benefits of term insurance mentioned in the article, it certainly makes sense to take adequate term insurance as early as possible in your life.?Or else, all that remains afterwards, is regret!
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