Why the 20s are not considered early to buy a Term Plan
One oft-repeated adage in financial planning is that if you want to become financially independent, it is better to start early. Having time on your side is always a great advantage. This mantra applies to insurance policies too as much as it applies to investing. If you’re in your 20s and have just embarked on your career, it is a great time to buy a term insurance policy.
What is Term insurance?
Term insurance is a kind of life insurance policy in which insurance cover is provided only for a specified period of time known as the term. By comparison, a permanent life insurance policy provides insurance cover throughout the lifetime of the insured. Term insurance policies however have the benefit of being cheaper as compared to permanent life insurance policies. This in turn makes term insurance policies extremely popular.
Why You Should Buy Term insurance in Your 20s
- Lower Premiums – Insurance premiums are calculated on the basis of the risk profile of the insured. This works in the same way as lenders charge interest based on the credit risk assessment of the borrower. The greater the risk, the higher the premium or the interest. In the case of term insurance, this risk is assessed in the form of mortality. When you are young and healthy, you fall in the lower risk category and as a result, you have to pay a lower premium as compared to buying an insurance policy when you are older. One can use the term policy calculator to compare the premiums offered by various insurers and calculate the term life insurance premium that allows you to choose the best plan that suits your requirements.
- Longer Duration of Cover – By getting term insurance in your 20s, you make sure that you enjoy insurance cover for a longer duration of time. By comparison, if you were to get insured in, say, your 40s, you would obviously enjoy the safety of an insurance cover for a much shorter period of time.
- Tax Benefits – Term insurance policies qualify for tax benefits of up to Rs. 1.5 Laks under section 80C of the income tax act, 1961. This means that by getting term insurance in 20s, you get to make greater savings over a longer period of time. Thus, term insurance not only helps you secure your family it also aids you in long term wealth creation.
- Security for Dependents – People in their 20s are often either unmarried with old parents at home or newly married with infant children to take care of. In each case, the dependents are vulnerable and in need of financial security. In case of the insured’s untimely death, a term insurance policy would provide adequate protection to the dependent’s in their most vulnerable time.
- Convenience – Term insurance policies can now easily be bought from online marketplaces such as Finserv MARKETS with just a few clicks. On Finserv MARKETS, you can compare the features of all the different term insurance policies and choose the one that best suits your needs. What more, you can even purchase it using your preferred mode of payment and have the policy document delivered to your inbox within a matter of hours.
The Bottom Line
Term insurance policies provide great benefits for a nominal premium. It is advisable to buy a term insurance policy while you are still in your 20s as this provides the greatest benefit. With term insurance policies now available on online platforms such as Finserv MARKETS, buying term insurance has become very convenient and hassle-free.