Purchase Insurance before 30s
Purchase Insurance before the 30s
It is said, Better Late than Never. But, this doesn’t apply universally. You should avail a Life Insurance Plan, at least in your early 30s. What difference will it make? Let’s find out with Gaurav Chowdhry.
Until you reach the 30s, you may skirmish to get a good job. Now, when you hit your 30s, you may enjoy a clad career. You earn healthy, are in good health and recently started a family or schedule to start a family. You must have also started capitalizing to buy a house or a car. You’re traveling places. In short, you become more accountable in your 30s.
You become a responsible adult by the time you reach the age of 30.
But, it’s only human to not bother about the ‘what if’ moment that could otherwise leave one’s family in a state of financial crisis.
It’s smart to buy a term insurance if you want to ensure the financial well-being of your family the day you’re not around anymore.
Buying a term insurance by the age of 30 comes with its own advantages!
Let’s apprehend why it makes sense to buy term insurance by the age of 30.
Most endorsed financial product
We approach financial advisors to help us invest in mutual funds, SIPs, life insurance policies and pension plans. The idea is to keep our retirement years worry-free and risk-free.
Most financial planners will recommend you to buy a term insurance policy. Their logic is simple:
- Mutual funds and pensions plans can help you save money for your retirement days. You start investing early because you want to have a larger corpus at your disposal.
- But term insurance helps you solve a much bigger risk: risk of death. An unpaid loan, your plan to send the kids to college, financial security for your parents or your spouse. Even if you’re not around, your family will have financial support.
The best part is that term insurance plans cost lower than a lot of other life insurance products. You pay as little as 2 percent of your annual income for a coverage 20 times more than your current annual income.
Longer policy period
Generally, term insurance plans have an age threshold as well as a definite policy term. For instance, with Protection Plans you can opt for a policy term up to 40 years. By availing an insurance plan early in your 30s, you will be able to enjoy a longer cover without having to worry about age limit or policy duration. Thus, you will remain covered till the time you’ve taken care of your major liabilities.
Opening timely means lower premiums
Before you hit your thriving thirties, you are healthy. The lifestyle diseases like diabetes haven’t started taking a toll on you. Substances like alcohol, smoke, and pesticides in our food haven’t crossed the unhealthy levels.
This means two things:
- The younger you are while buying term insurance, the lower will be your term insurance premium. To put things in perspective, a 30-year-old non-smoker could buy a term insurance cover of Rs. 1 crore for as low as Rs. 552 per month. The same amount of term insurance cover could cost three times more (Rs. 1,400 per month) for a 40-year-old non-smoker.
- While applying for term insurance, one has to undergo a medical check-up. An insurance company could decline to cover you with a term policy because of a lifestyle-related disease. The chances of this rejection are definitely higher as you approach your 40s.
So, healthy and young = cheaper term insurance premium!
It covers your entire working life
Ideally, a term life insurance policy should cover you till you pay off all your loans, say till you turn 60 or so. Simply put, you may have loans, like home loan, to repay till the age of 55. Therefore, you will need to buy a term life insurance plan, which will cover you for at least 30 years. A shorter duration will not help your family.
You pay premiums for all your working life. God forbid if something was to happen to you in middle age when your kids are too young. You will not have saved enough for them. A term insurance plan will pay the entire sum assured, say Rs 1 Crore, which will be more than enough for them and premiums are almost a nil expense.
Deadlock your premiums now
When you buy a health insurance policy, your premium increases every year. But with term insurance, you lock the premium amount.
So, buying a term insurance earlier in life implies that you will pay a lower premium for the rest of the policy term. It works like this:
Ideally, a term insurance policy should cover you until the age you will have loans and liabilities. Your family may be dependent on you until you are 65. You may have some loans to pay-up till the age of 50. So a person buying term insurance at the age 30 will need a term cover for at least 35 years.
Anything for the shorter duration will not help your family when they might actually need it.
Don’t wait until you celebrate your 40th birthday to buy a term insurance plan.
Large sum assured
As there are fewer chances of pre-existing ailments in your early 30s along with a stable income, opting for a policy at this life stage entails a substantial sum assured. As you age, the body is more prone to ailments. In such a scenario, the chances of getting a large sum assured reduces. Even if your insurer provides substantial coverage, it would command hefty premiums.
We all are always on the look-out for the number of options to invest and save on income tax.
So, good news! Premium paid toward buying a term insurance can be part of investments under 80C deductions.
Money saved in tax is more money in hand for other important things in life. 🙂
Rely on no one but your best judgment. Buy a term insurance plan when they are the most affordable for you and offer the best risk cover to your family!
Turning 30 is a major phase in any one’s life. While we may wish that anything uncertain would not happen to us, life throws a lot of surprises. These surprises may be bitter. But to make them less bitter, it is important that you buy a term insurance plan and secure your peace of mind.
Make the right decision and avail a term life insurance plan before you hit your 30s. It is the most responsible thing you can do for your family and yourself.
Source: – Google Search, PTI, Wikipedia, Instagram & autonomous research.
Written by Gaurav Chowdhry, a freelance content writer.