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I made my first investment when I was 21. Here’s how

When you’re in your twenties, obtaining term insurance plans is the last thing on your mind. The common misconception in your twenties is that you don’t need term insurance plans since you are youthful and healthy. You also believe that since you have no duties or dependents, a term plan is unnecessary. Contrary to common opinion, you should get a term insurance policy as soon as feasible.

You may not have any duties right now, but we all will in the future. Making ensuring your loved ones are always safe is a vital part of future planning. You may do this by purchasing term insurance plans. A term insurance policy guarantees to pay the nominee an amount promised if the policyholder dies within the policy’s term.

Reasons to Buy a Term Plan Early

You should get term insurance as soon as feasible in your life for the four reasons listed below:

1. Premium amounts for the term insurance policy are low

This is the most significant benefit of purchasing term insurance plans early. The premium amount for term life insurance coverage rises dramatically as you become older.

Assume you wish to acquire a Rs 1 crore term life insurance policy that covers you till the age of 75. If your monthly premium is somewhat higher than Rs 6,000 at 25, you will spend roughly Rs 10,000 at 30. At 45, you’ll have to pay Rs 30,000 in annual premiums for the same coverage amount.

Whole life insurance is a long-term coverage that accumulates cash value over time. As long as the premiums are paid on time, the whole life insurance stays valid for the policyholder’s whole life, and beneficiaries will receive a predetermined death benefit upon the insured’s death.

You are healthier and have fewer obligations while you are younger; insurance companies take these considerations into account when determining whole life insurance prices.

2. As the premium amount is locked for life, you pay much less in total

When you purchase term insurance plans, the premium amount is locked in for life, meaning it stays constant throughout the policy’s duration. As a result, purchasing it early means saving a significant amount of money over time.

A 25-year-old, for example, must pay an annual premium of Rs 8,000 for term insurance plans to cover Rs 1 crore till 75. That is, he or she must pay Rs 4 lakh over the following 50 years. Meanwhile, a 35-year-old pays Rs 15,000 each year for the same coverage, totalling Rs 6 lakh over the years.

So you’ll have to pay Rs 2 lakh more for the identical coverage if you get it at 35 instead of 25. Buying early so means saving more money.

3. Your family and dependents get covered earlier on.

Waiting too long to get term insurance plans put your family in jeopardy if you die too soon, causing them financial trouble. Even if you are not married, how will your parents handle their finances if they rely on you?

Furthermore, if you have a loan – whether an automotive loan, a college loan, or credit card debt – your family members will be required to pay for it, this might put them under even greater financial strain.

Purchasing term insurance plans early on eliminates the need to worry about it.

4. Enjoy the tax benefit from the initial stage of your career.

The fundamental purpose of purchasing term insurance is to guarantee that your family does not face financial hardship if you are not present. However, there are tax advantages to purchasing a term plan.

And here are the three tax advantages of the term insurance plans:

Section 80C

You may claim a tax deduction for the premiums you pay for the coverage under this provision. Section 80C is the largest tax deduction pool, and you may claim a deduction of up to Rs 1.5 lakh for certain investments and purchases under this section.

Section 80D

This exemption applies to premiums paid for health-related coverage such as critical illness riders. You may claim a deduction of up to Rs 25,000 for the premium paid.

Section 10 (10D)

In the event of the policyholder’s death, the nominee may collect this tax advantage in addition to the amount insured. The full sum is totally tax-free.

How to Buy the Right Term Life insurance?

After you have safeguarded the future of your loved ones by purchasing the Sara Jeevan Bima plan, you may look into a more comprehensive life insurance plan. Look for life insurance that has the following benefits:

1. Right life cover amount

You have a specific way of life that you want your family to maintain even if you are not there. You must seek an insurance plan that will cover all of your potential needs.

2. Right policy tenure

You should choose a policy with a longer duration. Ideally, you should choose a policy with a duration equal to your retirement age minus your present age. However, given the growing age of loan maturity and employment, it is preferable to maintain an extended policy.

3. Add-on offers

Examine the add-ons provided by the life insurance policy, such as basic coverage, an accidental death benefit rider, critical illness coverage, and so on.

The goal of purchasing term insurance plans is to offer financial assistance to the insured’s family after they pass away. The primary goal of term insurance is financial security. Term insurance protects you against future expenditures and responsibilities if you die.

It is less expensive if purchased at an early age and for a longer duration of coverage. You are also incredibly healthy while you are young. If your coverage ends at 55, it is costly to renew, particularly if you have health problems.

Another need as people become older is protection against medical bills and coverage for catastrophic diseases, which have a propensity to deplete people’s lifetime savings. A term insurance policy is also purchased to cover current and future responsibilities, which decrease with age; thus, it makes sense to get term insurance plans while you are younger.

Wrapping It Up

Term life insurance is a necessary financial instrument that you must get sooner or later. But, if obtaining term insurance plans early on means paying less, enjoying tax advantages from the start of your career, protecting your family sooner, and so on, why pass it up?



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