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Term Insurance for Students in India
Most students today are focused on studies, career goals, and side hustles. Insurance may seem like something for older individuals with families or mortgages, but that's not the case. It can actually be a very smart move for students as well.
Whether you are in college, have just graduated, or are planning your future, this article will help you understand why obtaining term insurance early can save you money and provide you with peace of mind.
Table of Contents
Can Students Buy Term Insurance in India?
“If you buy term insurance for 30 years, and something happens to you during those 30 years, your family will receive a lump sum amount, also called a 'death benefit, ' which gives them huge financial protection.”
Why College Students Should Get Term Life Insurance?
Why College Students Should Get Term Life Insurance?
Getting term insurance as a college student might seem unnecessary at first, but there are some strong, practical reasons why it can be a smart financial move:
Cost-Effective Premiums
The younger and healthier you are, the cheaper your term insurance premium will be. Locking in a policy early means paying less for the same coverage than starting later in life without medical checkups.
For example, a 21-year-old non-smoking student can get a ₹50 lakh policy for as low as ₹300 per month. However, the same policy at age 35 could cost ₹800-₹1,000 per month.
Protection for Student Loans
Many students rely on loans to pay for their education. If something were to happen unexpectedly, these loans could become a heavy burden on your family. Having term insurance can help cover costs.
Future-Proofing Your Life
Starting early helps build financial discipline. It also means you already have a financial safety net when you eventually take on responsibilities like a family or a mortgage.
Let’s say you get married in 5 - 10 years. Instead of buying an expensive policy, your earlier, cheaper policy —a ₹50 lakh policy for a premium of ₹300 per month —will still protect your loved ones.
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Benefits of Term Insurance for Students
Term insurance can be a valuable financial tool for students, providing security and encouraging responsible financial planning, such as:
Affordable Premiums
Term insurance typically offers lower premiums than whole life policies, making it more affordable for students with limited budgets.
Financial Security for Dependents
If a student has dependents like younger siblings or ageing parents, term insurance can provide financial support during their untimely demise.
Flexibility in Coverage
Students can choose term lengths that align with their needs, whether they are completing their education or entering the workforce.
Building a Financial History
Early investment in term insurance can help students build a positive financial history and potentially lead to better rates in the future.
Encouragement of Financial Responsibility
Purchasing term insurance can encourage students to think about their financial future and responsibilities, instilling good habits early on.
Supplement to Student Loans
In unforeseen circumstances, term insurance can help cover outstanding student loans and prevent financial burdens on family members.
Health Lock-In
Being young and generally healthier allows students to secure lower rates now, which could increase significantly as they age or if their health deteriorates.
How Much Term Insurance Coverage Do Students Need?
Educational Loans
First, you need to know the total amount you borrowed, which impacts your overall financial strategy. Next, be aware of how interest accumulates since it can significantly increase your debt. Ultimately, understanding your repayment period enables you to budget your monthly payments more effectively and manage your finances more efficiently.Family Dependencies
When planning your finances, consider your family, who relies on their income, and any future responsibilities your family might have, such as supporting younger siblings or other family members who may need financial assistance.Future Career Plans
When planning your finances, start by researching potential salaries in your field of study to understand what you can expect to earn after graduation. This will help you determine how much debt you can afford to manage.Affordability
Students often have limited budgets. It’s vital to balance adequate coverage with what they can realistically pay in premiums.Final Expenses
Coverage should include enough to handle funeral costs and other final expenses, which can be a significant financial burden on family members.Health and Lifestyle
If a student has any health issues or engages in high-risk activities, they may consider a higher coverage amount, as premiums can be higher based on these factors.Types of Term Insurance Policies for Students
There are several types of term insurance policies that students can consider, each with its own features and benefits:
Level Term Insurance
Level term insurance is the most straightforward type of term insurance. The coverage amount and premiums remain the same throughout the policy term. It’s ideal for students seeking predictable costs and comprehensive coverage.
Increasing Term Insurance
In increasing term insurance, coverage increases over time, usually to keep pace with inflation or increasing financial responsibilities. This can be beneficial for students who anticipate higher future financial obligations. But premiums are higher compared to level-term insurance.
Convertible Term Insurance
Convertible term insurance policy allows the insured to convert the term insurance into a permanent life insurance policy without undergoing a new medical exam. This flexibility is useful for students who want more comprehensive coverage.
How Can Students Buy Term Insurance?
1. Research Options
Begin by researching different term insurance plans that cater to students. Look for policies with affordable premiums and adequate coverage.2. Compare Plans
Use online comparison tools to evaluate various policies. Pay attention to premium costs, coverage benefits, and policy terms.3. Check Eligibility
Verify that you meet the eligibility criteria for the chosen policy. Some insurers may have specific requirements for students.4. Seek Guidance
Consider consulting with a life insurance advisor or utilising online tools, such as premium calculators, to determine the best options for your financial situation and needs.5. Start Application
Once you have selected a policy, you can apply online through the insurer's website or offline by visiting their office in person. Provide documents such as identity proof, address proof, and educational loan details, if applicable.6. Review and Purchase
Carefully review the policy details before making a purchase. Ensure you understand the terms and conditions before proceeding to purchase the policy.Documents Required for Students to Buy Term Insurance
To buy term insurance as a student, you will typically need to provide the following documents:
Identity Proof
- Aadhaar card
- Voter ID card
- Passport
- Driving license
Age Proof
- Birth certificate
- PAN card
- School/College leaving certificate
Address Proof
- Utility bills
- Bank statements
- Rent agreement
Income Proof
- Salary slips
- Bank statements
- Income tax returns
Educational Proof
- School/College ID card
- Mark sheets
Note: Depending on the insurer's requirements, each section requires one or two documents as proof of term insurance for students.
FAQs about Term Insurance For Students
Are students eligible to buy a term insurance policy?
Can students get term insurance without income?
Why should a student consider buying term insurance?
At what age should a student start buying a term insurance policy?
What is the average cost of term insurance for college students?
Does term insurance cover outstanding student loans?
How does buying term insurance benefit students?
What is the process for a student to buy term insurance in India?
Are term insurance policies for students cost-effective?
Is a medical examination necessary?
Does term insurance for students continue if they leave college or graduate?
Are international students eligible to purchase term insurance in India?
Does term insurance cover accidental death for students?
Can students get tax benefits on their term insurance?
Is it necessary for students without loans or dependents to have term insurance?
What happens if I can't pay premiums during my studies?
What riders can students add to their term insurance policy?
How long does term insurance for students last after graduation?
Can international students buy term insurance?
Other Important Articles Related to Term Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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