Late 20s or early 30s are usually the years when a lot of major changes take place in your life. It is typically the time when you get married, have kids, or plan to have them. Also, this is the time when your career is in its growth phase and investment decisions made during these years have the ability to financially secure your future. Buy life insurance before 30 as the power of compounding increases with the term of our investment. The longer you stay invested, the more are the chances of getting higher returns from the investment; and this is the fundamental advantage of starting early.
Therefore, to welcome every change in your life, it is important to have your finances planned well in advance. Here are a few financial moves to make in order to start a financially planned life before you turn 30:
Buy a Life Insurance Before 30
Talking in numbers, the total cost of a term plan that covers you till the age of 60 is approximately the same whether you buy it at the age of 25, 35, or 45. As per the Policybazaar Term plan calculator, being a 30-year old, you would have to pay a total of Rs. 3.2 lacs over a period of 30 years for a cover of Rs. 1 crore. Your annual premium would be Rs. 9,904. If you start at 45, your total spend would come out to be Rs. 3.3 lacs i.e. an annual premium of Rs. 21,989. While your total premium outgo would be the same in both the cases, the annual premium liability on you in the second case would be substantially higher and most importantly, you would take a high risk by staying uninsured till the age of 45. So it is much more convenient to buy life insurance before 30.
Keep in Mind:
If you buy life insurance before 30, make sure you buy a policy that covers you at least till 60 years of age.The cover of your plan should be enough to settle your outstanding debts, generate income for your family, and cover the major expenses.Do not hide or misstate your personal information, such as medical history, smoking or drinking habit, etc., while buying insurance.Trying to unethically cut on your premiums can prevent you from getting the full benefit in the event of a claim.
Get a Mediclaim
Like any other insurance, health insurance also comes cheap if bought at a younger age. More importantly, it is difficult to get a health cover when you are old and prone to diseases. The older you get, the more is the waiting period. You might have to wait for 3 to 4 years before you actually start getting a cover.
It is not a good idea to rely upon the group health plan offered by your employer.You can initially go for a basic indemnity plan that covers your hospitalization expenses, but for personal coverage you should have life insurance before 30.If you are a self-employed professional, supplement your base health plan with a fixed-benefit plan. Such plans also cover you loss of income due to unfavorable medical conditions.Never consider the riders or supplementary health plans as substitutes for your basic indemnity plan. They are just the additional benefits.
Build a Corpus for Your Retirement
Unfortunately, while planning our finances for the future, most of us focus on the short term goals and neglect the retirement fund which is the most critical goal of our life. People often miscalculate the amount of funds they would require post retirement or start accumulating it too late. Remember, investing in a retirement plan in your early 30s, or buying life insurance before 30, is the best way to ensure inflow of funds during your golden years—alternatively, to your family.
Remember, you can take a loan to fund your child’s marriage but there is no such loan to finance your expenses post your retirement.