Paul Stanley once said "Youth is incredible because you really do feel invincible." Since young professionals feel nothing can go wrong at their age, they tend not to plan for their future. Life Insurance is a fairly low priority for young professionals as they have limited liabilities and no income dependents. However, for them term insurance is one of the preferred financial solution to have in their investment portfolio, since they can get adequate life cover at a comparatively lower cost.
Term insurance basics
Term insurance is the one of the easiest type of life insurance to understand. You pay a premium based on the coverage you want and your risk factors such as age, policy term, pre-existing health conditions or lifestyle habits etc, In the event of the life assured's death, the nominee gets the sum assured amount as promised.
The reason it is so affordable is because you are paying towards the insurance cover only. There is no maturity benefit under the plan. However, some life insurance companies offer return of premium on term plans, but such plans are relatively expensive.
Get higher coverage for less
Term Insurance can easily be worked into your budget due to its low premiums. This is because the younger you buy a life cover, the lesser the premiums are. Insurance premiums are linked with age, hence it is always advisable to buy a life cover at a young age when you are fit and healthy. Even small adjustments in your daily routine expenses can provide you an adequate premium for a term insurance. For instance, an Irani chai costs approximately `. 15/-. One won't even think twice about taking two breaks to go have chai at the corner tapri. This would set one back by `. 30/- a day.
Over the course of a year, these `. 30/- a day amass to `. 10,950/-. For the average non-smoker at the age of 25, this amount will fetch a term insurance cover of Rs 2 Cr. under Bajaj Allianz Life eTouch Online Term Plan for a period of 25 years.
Opt for term insurance
Term Insurance is a very affordable, and value-for-money life insurance plan. It provides adequate protection to ensure your loved ones' life goals continue to be achieved, even in your absence.
Depending on your preference, terms plans also give you an option to pay your premium monthly, quarterly, half yearly or annually. Apart from this, the premiums paid towards term insurance are eligible for deduction up to ` 1,50,000 under Section 80C of the Income Tax Act, 1961 subject to provisions stated therein. This is applicable on the life of policyholder, his/her spouse and children.
For young professionals, term Insurance is a preferred choice to have in the financial portfolio since it gives them the option to get insured at a low cost, save on tax, and fulfil their family's goals and aspirations. And the best part is, it costs the same as 2 chais a day!