Many young individuals do not have adequate financial responsibilities. So, they do not feel the need to invest in term insurance. The younger generation likes to spend on their lifestyle. However, they also should understand the necessity of investing in term life insurance to secure their family’s financial future.
Today, life has become unpredictable due to the ongoing Coronavirus pandemic. There is no right time to ensure the monetary stability of your loved ones. However, it is advisable to start doing effective investment planning as early as possible. Therefore, it is recommended that you purchase term insurance plans with an adequate sum assured so that your family can live a financially independent life after you are no longer around.
If you are not sure about the term insurance plan meaning and are searching for its features and benefits, then you are at the right place. A term plan is a form of life insurance policy that offers a high sum assured at an economical premium. It provides life cover for a specific duration and at a fixed premium. Various factors, such as your age, the sum assured, and policy period influence the term plan’s premium. However, this cost remains stagnant throughout the plan’s tenure.
Now when you know what term insurance is, let us understand the reasons to buy it at a younger age.
- To save on premium
Age plays a crucial role in ascertaining your policy’s premium. The premium is significantly lower for a younger person compared to an older policyholder. It is because, during this phase of life, there are lower chances of mortality or having any life-threatening ailment. So, you end up paying a cheaper premium for a large sum assured and tenure at a younger age. This cost will be higher when you invest in a term plan at a later stage in life.
- To avail of tax exemptions
One of the significant advantages of investing in term insurance plans at an early age is that you can start reaping the tax benefits and save more money. The premium you pay towards your term plan is eligible for a maximum deduction of INR 1.5 lakh per annum according to Section 80C of the Income Tax Act, 1961. So, this is a wonderful opportunity to save a considerable sum in the long run.
- To secure your family’s economic future
As term insurance offers a high sum assured to your family members if something untoward happens to you, the amount can be useful for them. They can use these funds to meet the household expenses and accomplish their aspirations. It is impossible to know what the future holds. So, it becomes vital to buy term insurance and provide much-needed financial security to your family right from an early age.
- To reduce the odds of policy rejection
As your age increases, there is a higher probability of the insurer denying your term policy application, as you are at risk of being diagnosed with life-threatening diseases. Therefore, it is a bad decision to delay investing in term insurance. When you are young and fit, the rate of mortality is low. So, the possibility of the insurer rejecting your application is minimal. Thus, you must buy a term plan at an early age to avoid such a situation.
- To create a base for a strong financial portfolio
Term insurance is the foundation of a comprehensive investment portfolio. You may consider investing in different financial products, such as mutual funds, shares, and fixed deposits to achieve your long-term life goals. However, what will your dear ones do if an untoward incident occurs? Will the sum of all these investments be enough to help them fulfill their needs and goals. Certainly, you cannot keep the financial future of your family in jeopardy. A term policy ensures that you have a stable portfolio. So, buy term insurance at the earliest and heave a sigh of relief.
Now, when you know the plus points of investing in a term insurance plan at a young age, it is time to search for a suitable policy that meets your requirements.