Introduction

Term insurance is one of the most popular insurances availed in India today. Almost every person purchases it at some point in their life to secure their loved ones in case they meet an untimely demise.

Despite having such a mass appeal, a common misconception propagated amongst young adults is that term insurance is something one should not worry about at this stage in their life. Instead, they should invest their money somewhere where it accrues better returns over time.

While this statement may sound logical to some, they do not realise the fact that opting for a plan like a term life insurance policy early on would benefit them in the long run.

In this article, we list out 5 compelling reasons why term insurance is an ideal investment at a young age:-

It makes the insurance cheaper in the longer run

The biggest advantage of buying term insurance at a young age is that insurers offer the insurance at significantly lower premiums than they would charge you if you were to purchase the policy at 30 or 40 years.

For example, if you opt for a term life insurance plan with a coverage of Rs 1 crore till the age of 75, a young adult in his 20s would have to shell out just around Rs.8000. This means that they would have to pay the insurer Rs 4 lakh in total for the next 50 years. Meanwhile, if a 35-year-old wants to get insured for a sum of 1 crore till an age of 75, they need to pay nearly Rs 15,000 for 40 years, which is roughly Rs 6 lakh in total.

Hence, you are not only saving Rs. 2 Lakh if you begin at an early age, but also get insurance for 10 additional years. You could refer to the term insurance calculator available on Finserv MARKETS to get a definitive idea of your unrealised savings.

Tax benefits

The premium paid for term insurance plans are exempt from being taxed under Section 80C of the IT Act. Hence, one can avail benefits of up to Rs 1,50,000 per year. This makes term insurance policies a crucial tax savings investment for young professionals.

You are less likely to get rejected 

Insurers in India are dubious in offering coverage and often charge high premiums from clients that suffer from pre-existing illnesses at the time of purchasing the policy. Being in the prime of your youth, you are less likely to suffer from pre-existing health conditions and old-age conditions. Hence, it is more likely that your insurance application would be approved at a minimal premium.

Additional benefits

Novel term insurance policies provide clients with additional optional benefits alongside providing a basic death benefit. A client is presented with an array of ‘add-on riders’ to further augment their financial security. These include plans such as accidental death benefit, premium waiver, and the critical illness cover which is by far the most popular.

To secure future dependents

Lastly, every young adult must realise that their responsibilities towards their family are only going to increase from here on. Purchasing a term insurance is a crucial step in ensuring the financial security of your dependents, especially if you are the sole breadwinner of your family.

Conclusion

Purchasing a term plan at a younger age offers multiple benefits of its own. In the long run, we see how the benefits of purchasing term insurance at a young age are a better idea. It makes the policy cheaper, offers various tax benefits and makes you less likely to be rejected for coverage.

If such an array of additional benefits are being offered, then why should one delay saving money on something they would need to purchase, eventually?