in Insurance, Personal Finance

Why It’s Good To Buy A Term Insurance At The Early Stage Of Your Life?

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When you are young, a term plan probably isn’t on the priority list since you’re really active and healthy. Being in your 20s, it’s common notion that you don’t need a long-term strategy because you’re youthful and healthy. Also, we believe that a term plan is unnecessary because you have no duties or dependents. You should acquire a term plan as soon as possible, contrary to common opinion. Buying term insurance early has a bunch of benefits.

The Benefits of taking Term Insurance at your 20s are:

1. Low Premiums

Buying term insurance at early costs less money. When you purchase a term plan when you’re young, the premium is minimal. As you get older, the premium amount increases. Buying the same 1Cr term cover will cost you a lower premium at 25 years than at 35 years. It’s a simple calculation of money and time.  This price differential in premium is because the insurer knows that younger often means healthier and reduced chances of early claims payout. Hence, you get a low premium insurance policy at the early age of your life compared to the same policy at 35.

2. Lower Total Costs

If you purchase long-term plans, Early term plans allow you to enhance your life insurance coverage within your existing policy at a cheaper premium cost. The premium, once set, is locked forever-you pay the same amount throughout the policy terms. There is one more thing, as you grow, the responsibility also grows, expenses also grows, so, it’s always better to get covered at the early stage of your life. By opting for a term plan when young, you get to go on paying pocket-friendly premiums. This can bring down your total cost significantly.

3. Your Dependents Get Covered Early

In our 20s, the responsibilities are almost nil. But at 40 or 50 age, we have to deal with responsibilities such as family and children. In our 50s it’s hard to deal with financial risk as we also have to deal with the dependents.  The longer you wait to get a term plan, your dependent stands the risk of facing the financial impact of your untimely demise, if it happens. With a term plan, you don’t have to worry about the finances part at least.

4. Tax Benefits

Who doesn’t want to save tax? Everyone wants to save tax even if it is few. Term insurance allows you to save taxes under the Income Tax Act, 1961. Under the act, there are various subsections, which allow you to avail of the tax benefits and save taxes.  Under section 80C, you can claim tax deduction benefits on the premiums paid from early on in your career. So there are both life and after life advantages. At the end of the day, it’s more cost-effective to get a term coverage.

5. Bottom Line

Although good health is a privilege, it does not always stay like in your 20s. Some health problems may arise after you reach the age of 50. You may have a bunch of assets, even though you have settled into your work with a steady paycheck. At 50, you start to wonder what would happen if you weren’t there for them tomorrow. It’s also terrifying to think of leaving your family in a financial bind. If you buy term insurance early in your life, you may avoid all of this since you will receive various advantages in the future.

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