India has a lot of educated young population who are working in various sectors. Despite being young, secure, and independent, the majority of them hear about term insurance but do not buy it. Although they are aware of all the benefits of taking a term insurance plan but they think they have a lot of time. What this population does not realize that in just some years they have will have a family, and with such a change, a lot of responsibilities will also come on their shoulders. This is when you start to focus on the other responsibilities of life and start delaying the idea of buying a term plan.
Let us today discuss some of the reasons that justify why you should buy term insurance at a young age.
- Lower premium: Young people have lower health risks; therefore, the insurance companies offer them a lesser premium. The older you get, the more health risks you have, and the insurance companies do not let you choose a lower premium in that situation. So, the sooner you start it, the lighter it is in your pockets.
- Tax benefits: Tax insurance offers tax benefits under Section 80C and section 10(10D) of the Income Tax Act 1961. This helps in bringing down the taxable income and also lessening the tax liability. Under this section, you can claim up to INR 1,50,000 of your insurance premium. The benefits that you obtain from a term insurance plan are also exempt from tax, under section 10(10D) of the Income Tax Act, 1961. However, the sum assured has to be at least 10 times the annual premium paid.
- Reduced dependence on term insurance provided by employer: As you progress in your career, you will receive better opportunities and may even switch your job. In such a situation, the term insurance policy offered by your current employer will get terminated. However, if you buy a term insurance plan on your own, you do not have to be dependent on any employer.
- Lower rejection rate: Young people are less likely to have any pre-existing illness. However, with growing age, it is usual for people to get some kind of illnesses. And term insurance applications with pre-existing illnesses mentioned in them can get rejected. So, the sooner you buy a term insurance plan, the lesser the chances of your application being rejected.
- Stress-free life: If you purchase term life insurance when you are young, you get chances of modifying it, as and when required. You can even reduce or increase the insurance cover, as per your need.
Some Term Insurance Tips
Since you are planning to buy term life insurance at a very young age, here are a few term insurance tips that might help you.
- You must calculate the coverage of the term insurance that your family would need in the future. It would be great if you consider the inflation factor.
- You must determine the tenure of your term insurance plan. This will help you to settle with the right policy. You can choose a plan tenure that is not too short or too long. If it is too short, it may lapse before the financial obligations are over. If it is too long, you may have to keep paying the premium even after retirement.
- Make sure the premium is as per your budget. If it is a bit too heavy on your pockets, it can be difficult for you to keep paying.
- You need to be sure who you are choosing your nominee as. The nominee should not only be able to take care of the family when you are not around but also should have an understanding of finances.
- You need to focus on the claim settlement ratio. This will help you to understand the efficiency of the insurance company in settling the policies.
For a better understanding of the term insurance plans, you can visit the IIFL Insurance website. You can also compare the plans from different companies and finalize the one that you think is suitable for you and your family.
