The minimum age at which you can buy a term insurance plan for yourself in India is 18 years.
Term Life Insurance for Young Professionals
Buying term life insurance for young adu lts when they’re in their 20s is a responsible choice and comes with its own advantages. It provides financial security for the dependents in case of their untimely demise. Also, if you are a young adult your financial goals will be quite different from people in their 40’s.
Let’s understand the need for buying term insurance at a young age, with the help of an example.
Meet Rahul, a 24-year-old living in Bengaluru who has recently started working as a software engineer. Relatively healthier than his parents, Rahul is living a fulfilling life. However, he has a load of student loans to pay off and an ill father to take care of.
However, Rahul isn’t aware of term life insurance policies which can help secure his family's financial future. Like Rahul, many youngsters in India are unaware of the benefits of buying term life insurance at a young age. They think life insurance is needed only if they have dependent parents or children.
If you relate to Rahul and other such young professionals, read here to know why you should get the best term life insurance for young adults today.
How Does Term Insurance Work?
Term insurance is a type of life insurance policy which provides coverage for a pre-determined term/period. Under this insurance if the policyholder passes away during the term while the policy is still active, the nominee will receive the sum assured.
Term insurance policies are the best for people who are the sole breadwinners of their family or those who have dependents and want to financially secure the future of their loved ones.
Why Should You Buy Term Life Insurance at a Young Age?
You can save more on premiums by buying a term life insurance policy while you’re still younger, as then the premiums are quite low. Also, given the advantage of your young age, you may be able to add more coverage over the years without having to go through the health evaluation process all over again. This way you can lock-in term insurance early on.
Here are other reasons you should buy the best term life insurance for young adults.
Get Lower PremiumsTerm insurance premiums are significantly lower for people in their 20s or early 30s as youngsters have a lower risk of developing chronic health issues, leading to lower premiums. Also, buying term life insurance at a later stage in your life can increase premiums by 50-100%, especially if you happen to develop a lifestyle disease or any other illness.
Reduce Chances of RejectionIt is better to purchase a term life insurance policy when you're young and healthy. Young adults usually suffer from fewer medical issues, making it less likely that their term life insurance application will be rejected. However, if you have pre-existing medical conditions, insurers may still deny coverage or charge a very high premium.
Stay Financially SecuredAs a young adult, you may have financial responsibilities such as outstanding education loans or other expenses if you have dependents. So, in case of policyholder’s untimely demise while the policy is still active, your term insurance can provide financial security to your loved ones and ensure that they can continue to meet their financial obligations.
Benefit from Flexible PlansTerm insurance plans come with different riders or add-ons that you can purchase with your policy as per your needs, by paying a nominal additional premium, to enhance the coverage and get better benefits. Thus, youngsters can choose to add these riders at important milestones in their lives like marriage and childbirth, as per their changing needs.
Save TaxYou can avail tax benefits under Section 80C, Section 80D, and Section 10(10D) of the Income Tax Act, 1961. So, investing in the best life insurance policy for 18-year-old, when you're still young can help you save more money on taxes as you age.
Get Longer Coverage
Buying term insurance at a young age provides you with coverage at an affordable premium rate for a long-term. This way you also ensure the financial future of your family remains secured by paying a nominal premium to the insurer as compared to if you buy a policy in your 30s.
So, all in all, buying term life insurance for young adults provides you with peace of mind knowing that your loved ones will be financially all right in case of your untimely demise.
What to Ask Yourself Before Buying Term Life Insurance?
As a person in your 20s, you might be tight on budget and may tend to buy insurance policies based on your current financial situation, which is not a good decision.
So, what should you ask yourself before buying the best term insurance policy for young adults?
Here are 4 questions to ponder upon:
1. What are my future goals?
- Chart out a rough plan of how you want your future to look like - if you want to study further and want a loan or if you want to get married and have kids.
- These goals will determine the type of term insurance policy and riders that will help your family go through financial turmoil in case of an unexpected event.
2. What are my liabilities?
- Always consider your current or future liabilities like outstanding loans, or if you intend to take a loan in the future before you purchase a term policy at a young age.
- Make sure your insurance covers your financial liabilities to avoid burdening your family with EMI repayments.
3. Do I have dependents? How many?
- Consider the number of dependents you have and plan for their needs in the future.
- Ask yourself - Do you have aging parents with medical conditions? A spouse who may not have a fixed source of income? Will you have children in the future?
- These factors will determine the coverage amount required to provide your family with a comfortable life in your absence.
4. What health issues do I suffer from?
- Include your health issues, if any, in your term insurance plan.
- This will determine your premium and allow you to opt for relevant riders to get enhanced coverage and financial protection.
How to Choose the Right Term Life Insurance Plan for Young Adults?
Coverage AmountCheck the coverage amount of the term life insurance policy and if it is sufficient to meet the financial needs of your family in case of your (policyholder's) untimely demise. As young adults, this should be decided based on your current and future financial obligations.
PremiumsCompare the premiums of different types of term insurance policies offered by different insurance companies to land at the best term life insurance for young adults with lower premiums. However, don’t only be blinded by low premiums; choose the one that offers the best value for money.
Policy TermAs a young adult, it is highly beneficial if you choose a term insurance policy with a long term, enough to provide financial security to your family. This way you will remain insured as you grow older, when there’s a high chance of developing health issues, by paying the same affordable premium. Also, you must consider your age, financial goals and liabilities while choosing the policy term.
Premium Payment FrequencyThe premium can be paid monthly, quarterly, half-yearly, or annually. So, young adults can choose any of the premium payment frequency based on their financial goals and budget.
RidersLook for term insurance policies that come with riders at affordable extra premiums. Make sure that the policy you choose offers riders that satisfy your specific needs and provide necessary coverage.
Claim Settlement Ratio
Buy a term life insurance policy from an insurance company with a high claim settlement ratio to ensure that your family receives the death benefit quickly and hassle-free, in case of an unfortunate event.
Therefore, buying term insurance at a young age is a wise investment decision. Young adults can avail themselves of the benefits of lower premiums, financial security, longer coverage and tax benefits.
FAQs about Term Insurance for Young Professionals
Typically, people should buy term insurance while still in their 20s, as it is the age when most people start earning, have relatively few expenses, are healthier, and can get policy at lower premiums.
You can nominate anyone as the beneficiary of the term life insurance policy. However, you must keep the nominee updated in case of any personal changes such as marriage, divorce, or birth of a child.
Yes, young adults can switch to a different term life insurance policy after they have compared the policies and if they feel the new policy will provide better coverage and benefits. However, they need to follow certain rules and regulations to make such a type of transfer possible.
Other Important Articles Related to Term Insurance
- 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.