In India, most individuals start thinking about term insurance, only when they get married or have children. In short, we believe that buying term insurance is something married people should worry about since they have dependents.
However, there are several reasons to think about term insurance now, even before you’re in that boat. For one, even if you die, not all of your debt goes away. Instead, your student loan EMIs, credit card bills or any other debt you have, befall on your parents, spouse or next of kin. If this happens, the death benefit of your term insurance policy will help ease the financial burden on your surviving family.
Second, if you plan on marrying or have children in a few years, buying a term insurance plan would be much cheaper to have now when you are young and healthy. As you age, buying term insurance would get that much expensive.
In Your 20s
Most of us finish college and start a professional career in our 20s. While you get the much-coveted financial independence for the first time in your life, you have very few things and responsibilities to worry about.
Experiences Matter More
In our 20s, we often tend to spend most of your money on trivial things and experiences. For example, we don’t shy away from spending thousands while partying on a Friday night or having a fancy dinner over the weekend.
The Pitfall of Financial Liabilities
Now imagine, if you have an education loan or any other massive liability to pay off, and you meet with a life-threatening accident, what do you think would happen next?
The entire responsibility of paying off your loan or any other debts would fall on your grieving parents, who are already vulnerable, having to deal with your absence. By having a term plan in place, you can make sure that in any such scenario, your parents would have the required financial support and much more, to tackle any sudden expenses.
Financial Security with a Term Life Cover
Buying term insurance in your 20s would mean paying annual premiums up to Rs. 12,000 approximately for a significantly large coverage amount (1 crore) and 35 years term. Thus, you can financially secure your family’s future against all eventualities, while continuing to pay the same rate of premium (regardless of the rate of inflation).
Tax Savings Aplenty
To top it all off, all term insurance plans offer tax deductions up to Rs. 1,50,000 under Section 80C of the Income Tax Act 1961, while the death benefit is tax-exempted under Section 10(10D) of the same Act.
In Your 30s
Start of a New Journey
If your 20s are about self-realisation and experiencing a care-free life, your 30s are all about undergoing an emotional and social metamorphosis. Entering into the third decade of life, most of us marry off and start a family.
A Plethora of Responsibilities
Being a family person, therefore, your responsibilities increase manifold, and you are no longer in a phase of life where someone else would take decisions on your behalf. Not only do you have to support your spouse and children, but you also have to make sure that they remain financially independent throughout their lives, even when something happens to you.
Financial Security of Your Life Goals
While you must start saving for your life goals in your 30s, you must also create a safety net to secure those goals with a term insurance plan. Otherwise, all your dreams and aspirations for your family would be left unfulfilled, should a tragedy strike and you be no longer there for your loved ones. You can avoid any future financial crisis by choosing a term plan.
Tax Savings and Much More
Term plans not only offer a comprehensive life cover for your family but also avail numerous tax saving benefits under Section 80C and 10(10D). Further, you are also saved from worrying about missing your policy payments or your monthly budget getting overboard, with the help of the Electronic Clearing Service (ECS), which will help you automate your monthly premium payments.
In Your 40s
Most individuals in their 40s have already covered much of their long-term debts such as a home loan or car loan EMIs. However, other responsibilities such as providing for your child’s higher education or planning for your retirement still need you to maximise your existing wealth.
Need for Financial Security for the Family
Once you are in your 40s, you would require a far more substantial financial protection to protect your family’s future. Even in case of an eventuality, your family would need assets to sustain their lifestyle. In short, you must avail a term plan with a significant life cover to touch all bases.
Term Cover Benefits Aplenty
If you’ve waited till your 40s to purchase term cover, the premium amount payable may shoot up. Despite the high premium, you can still reduce your tax liabilities by up to Rs. 1,50,000 under Section 80C. Even the death benefit that your beneficiary would receive is tax exempt under the existing Income Tax directives.
In Your 50s
Some may argue the viability of buying long-term insurance protection such as that offered under a term insurance plan. Given the fact that the premium payable is likely to be almost double of the amount what you would pay in your 40s (regardless of you being a smoker), most people avoid buying term insurance.
However, the benefits of having a term insurance policy hold true, even if you have crossed 50 years of age. Thus, it is advisable to avail a term plan if you have significant liabilities to pay off or you are the sole earning member of your family.
Don’t Delay, Get Term Insurance ASAP
Term insurance is an expense, most of us are likely to ignore, just out of habit. It is possible that you may overlook a situation where the need for life protection is not immediately apparent. However, the financial consequences of not purchasing adequate insurance coverage are likely to be severe.
Regardless of your age, therefore, you must spare a moment and think through the need of buying insurance. At Future Generali, we believe that you must see coverage as protection and not just another financial expense. Only then, you will be able to see gaps in your financial security and take steps to protect your dreams through insurance.