People in their 20s today are very knowledgeable and passionate about living their lives and developing a steady profession. They begin to understand their obligations at a young age and make thorough financial plans. The purchase of a term life insurance policy to give your family members a financially secure future is one of the most important decisions that must be made while making financial plans.
What is Term Insurance?
A term insurance policy is a pure protection strategy that shields our loved ones from life’s greatest dangers and uncertainties. The danger of premature passing away is covered by term insurance plans, which also offer death benefits to surviving family members to assist them in covering costs in the event of the policyholder’s untimely passing away.
Young adults in their 20s are either in school or seeking a new career, and most of us enter the workforce to obtain student loans for graduate or professional degrees. As a new employee, your paycheck is rather low, and it will take some time to pay off your debt. If such an awful tragedy occurred, your full financial responsibility would be immediately passed to your family. Therefore, having a long-term strategy relieves your parents’ financial burden and enables them to pay off debt.
Many insurance specialists and authorities suggest acquiring a term plan at a relatively young age. To learn more about why the 20s are the optimum age to purchase term insurance, read the section below:
Why you should purchase a term plan in your 20s:
- Lower premiums at a young age
One of the unique advantages of term insurance is a lower premium. The earlier you purchase a term insurance plan, the less you will have to pay in premiums, which is one of the crucial factors in a term insurance plan. You may be young, healthy, and active in your twenties, making it possible to purchase a term plan with high coverage at reduced premium prices. When compared to an older person with pre-existing conditions, the rates are lower and more affordable when people are younger.
- Simple purchase process
Insurers now provide online services to purchase term insurance, which is far more convenient than an offline procedure. To compare various insurance plans from various insurance firms and make an educated choice, policyholders can do so simply. Comparisons can be made based on features, benefits, premium costs, terms and conditions, sum assured, etc. A term insurance plan can be purchased using several online tools, including a term insurance calculator and an eligibility calculator. These calculators assist you in calculating the premium amount following your preferences, including age, the amount of insurance, income, and lifestyle habits. As a result, you can select the ideal term insurance plan.
- Keep yourself safe for a longer time
The optimum time to purchase a term insurance policy is while you are in your 20s because it will give you longer-term financial security. By paying a little fee to the insurance company, gives you a choice to select a policy tenure of 20–25 years and assures that you and your family are kept financially safe and protected.
- Take care of your dependents in your absence
Your family may not be financially dependent on you if you are in your 20s. But what if you are the only earner in the family? In that situation, you would need to purchase a term life insurance policy to provide for your loved ones in the event of a tragic event where you lose your life. Dependents may utilise the death benefit to cover expenses and debt in several circumstances.
- Riders
Term insurance plans are available with a variety of riders, depending on your preferences, to reinforce and improve the plan’s advantages. By paying a small additional premium, you can add riders to your current plan, giving you more protection against monetary emergencies. You can calculate the cost of your premium using aterm insurance calculator.
- Tax advantages
In addition to defending your family against life’s uncertainties, getting term insurance at a young age enables you to start saving a sizeable sum each year. It is a fantastic technique to avail of term insurance tax benefits. The policy premium is exempt from taxes up to Rs 1.5 lakhs under section 80(C) of the Income Tax Act, 1961. Early investment can therefore result in greater tax savings.
The tax benefits mentioned in the article may not apply if you opt for the new tax regime since many tax exemptions and deductions have been scrapped within the new regime.
Passing away is an unavoidable, universal truth of life that cannot be changed, but one can be ready to shield his or her family from any financial hardship by being financially prepared. Make sensible plan selections, start investing early and even avail of term insurance tax benefits. The tax benefit is subject to change in tax laws.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
Source: https://www.policybazaar.com/term-insurance/articles/why-buying-term-insurance-in-20s-is-not-early/.