Why Should You Consider Buying a Term Insurance Plan in Your 20s?
Buying a term plan in your 20s can help you plan your finances better. At this age, most individuals are young, healthy, and have limited responsibilities, which can help them get a life insurance policy at a lower premium. Since life insurance premiums are linked to factors such as age , health etc, starting early gives you lifelong benefits, especially when you consider the rising cost of living and unexpected life events. Additionally, the earlier you start, the longer your financial protection lasts, providing security to your loved ones even as your responsibilities grow.
Benefits of buying term insurance in the 20s
Still contemplating why, you should choose buying term plan in your 20s? Take a look at these term plan benefits that you can expect:
Being 20 will get you a great deal
Term insurance premiums rise with age. Thus, buying a plan in your 20s can benefit you more than buying one in your 40s. Also, as your policy premiums will remain the same throughout the policy term for regular plans, you get a substantial cost benefit⁵.
You can opt for an increasing cover
Another major advantage you can enjoy with a term plan is that you opt for an increasing cover. Here, the sum insured will increase over time, but the premium will remain constant, subject to plans and insurers terms and conditions. 3
Prolonged coverage
Your loved ones may depend on you financially. When you buy a term plan at a young age, you can ensure that your dependents will have financial security for a longer time. For example, if Varsha opts for a 40-year policy, she will have life coverage till the age of 67.
Tax benefits are an added advantage1
The premiums that you pay towards a life insurance policy offer you tax benefits.
Low chances of rejection4
Though rare, life insurance companies can reject your term insurance application if they consider you a risky applicant according to underwriting practices. For a young and healthy individual, there is very little chance of a policy rejection.
Peace of mind
Probably the biggest advantage of buying a term plan in your 20s is that you can enjoy the peace of mind that your family members will be financially secure, even if something terrible happens tomorrow.
Things to consider before buying term insurance in your 20s2
So, all set to get your hands on a term plan, keep these things in mind:
- Make sure you factor in your liabilities, other financial commitments and inflation in mind when you determine the term insurance cover.
- A general thumb rule is that the term plan amount should be a minimum of ten times your annual income plus your financial liabilities and loans.
- Prefer choosing a longer term to safeguard the future of your loved ones for a long time.
- You can opt for term insurance riders for enhanced coverage. However, opt for what you really need.
- Most plans come with three premium paying options: single pay, limited pay and regular pay. Make sure that you choose one that suits your needs.
- Choosing the right term insurance company is important. Make sure to do your research and choose the most well-suited plan from the top life insurance providers in the country.
Why is term insurance necessary in your 20s?2
Many financial experts are of the opinion that term insurance plans should be the first life insurance policy that anyone invests in. These plans are not just simple to understand but offer substantial coverage at a very reasonable cost.
As a 20-year-old, you may want to invest and generate returns, but first you should protect your financial goals. Once you feel that you are adequately insured, you can explore as many investment options as you want.
Conclusion
Buying term plan in your 20s can be one of the wisest financial decisions you make. Your premiums are at their lowest, and you can safeguard your family for a long time from such a young age!
FAQs
Can a 20-year-old get term insurance?
Absolutely. Most life insurance plans are available for people over the age of 18.
What is the maximum age for term insurance?
The maximum age for term insurance can differ from plan to plan and company to company.
Is there a salary limit for term insurance?
In India, as of now, there is no such criteria. However, it is highly recommended that you choose a policy that fits your budget so that you can keep paying the premiums easily.
Can you buy riders with a term insurance plan in your 20s?
Yes, you certainly can. Depending on the term plan you opt for, you can get riders such as accidental death and disability, critical illness rider, waiver benefits, etc.
How does the life insurance premium amount get affected by the increasing age ?
As you grow older, the cost of buying a term insurance plan increases. This is because with age, the chances of developing health problems also rises. Insurance companies consider this a higher risk, and may charge more premium..
Does buying life insurance in your 20s ensure lower rejection rates?
Most young individuals are generally in good health and have fewer pre-existing medical conditions. While age alone doesn’t determine acceptance or rejection, health is one of the factors determining your premium.
Does buying a term insurance plan help save tax?
Buying a term insurance helps save taxes as the premiums paid for a term insurance policy are tax-deductible under Section 80C of the Income Tax Act, up to ₹1.5 lakh per year (under old tax regime). Also, the payout received by the nominee is tax-free under section 10(10D) subject to certain terms and conditions.
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