Why the 20s Are Not Considered Early To Buy A Term Plan

‘It is never too early to get yourself covered with a term plan’.

As we all know, life is full of uncertainties and unpredictable responsibilities with
never-ending ups and downs. Thus, it is a smart decision to invest in a term insurance policy as early as you start working. Having a term insurance plan gives financial assurance to you and your loved ones in case of an unfortunate event.

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Nowadays, people in their 20s are very well-versed and passionate about leading their lives and building a financially stable career. They are realising their responsibilities from a very young age and planning their finances well in advance. One of the most crucial steps that are to be considered while planning finances is to buy term plan to provide a financially secured life to your family members. 

What is a Term Insurance? 

A term insurance plan is a pure protection plan that protects our loved ones against the biggest risks and uncertainties of life. The term insurance policies cover the risk of premature death and provides death benefit to the family members which helps them meet their expenses in case of the policyholder’s untimely demise. 

Let’s understand this with an example

Youngsters in their 20s are studying or trying to get a new job and most of us enter a professional market to get the student loan for higher studies or business. As a fresher, the salary is relatively low and it will take few years to pay back the debt amount. In such a case, if you met with some unfortunate event, your entire financial accountability will directly get transferred to your family. Therefore, having a term plan helps your parents from bearing the financial stress and they can pay debt easily. 

Various insurance researchers and experts advise buying a term plan at very early ages. But have you ever given a thought to this concept? The primary question that comes up to mind is, why it is important to have a term plan at a very early age? Let’s read the below section to know more about why the ’20s is the best age to buy term insurance plan:  

Reasons to buy a term plan in your 20s

  1. Lower premiums at a young age 

    Lower premium is one of the distinctive term insurance benefits. One of the important considerations in a term insurance plan is the ‘earlier you buy a term insurance plan, the lower the premium price you have to pay. 

    In your twenties, you may be all healthy and active and you can buy term plan with high coverage at lower premium rates. The premiums are lesser and cheaper at early ages as compared to an older person with pre-existing illnesses. However, it is advisable to purchase a term insurance policy at a young age so that you can save your hard-earned money for the long run. 

    Below is the sample premium comparison of term insurance plans for 25 years old, 30 years old, 35 years old, and 40 years -old healthy males. The total Sum assured is Rs. 50 lakhs.

    Age (in years)

    Premium (in Rs.)

    20

    447

    25

    511

    30

    583

    35

    705

    As you can see in the above-mentioned table, that with the increase in age, your premium is also increasing for a term policy. In the ICICI Prudential iProtect Smart term insurance plan, a premium amount of Rs.447 is required to be paid by a non-smoker healthy individual of 20 years whereas Rs. 511 will be paid by a 25 years old individual, indicating that the premiums are lesser at early ages. 

  2. Easy Buying Process 

    These days insurers are offering online services to buy term plan , which is quite convenient than an offline process. Policyholders can easily compare different plans from several different insurance companies based on their features, benefits, premium amount, terms and conditions, sum assured, etc., and to make an informed decision. Furthermore, there are many online tools available that can help in buying a term insurance plan such as a premium calculator, eligibility calculator. These calculators help you in determining the premium amount based on your chosen preferences such as age, sum assured, income, lifestyle habits. Thus, you can choose the right term insurance plan in one go. 

  3. Stay protected for a longer period 

    The 20s is the best age to buy term insurance plan as it provides you financial security for a longer period. It provides you with the option to choose a policy tenure for 20-25 years and ensures that you and your family remain financially secured and protected by paying a nominal premium to the insurance provider. 

  4. Take care of your dependants even in your absence 

    In your 20s, your family might not be financially dependent on you. But what if in case, you are the only earning member of your family, you must buy term plan to secure your loved one’s future in case of an unfortunate event like death. In such situations, dependants can use the death benefit for paying their expenses, debts. Thus, a term plan ensures the protection of your family member even if you are not around. 

  5. Riders 

    Term insurance plan comes out with different riders as per your choice to strengthen and enhance the benefits of the plan. Riders can be added to your existing plan by paying a nominal additional premium that provides you more safety against financial crises. 

  6. Tax Benefits 

    Apart from protecting your family from the uncertainties of life, purchasing a term insurance plan helps you to save a significant amount every year at an early age. It is a great way to save tax. As per section 80(C) of the Income Tax Act, 1961, the premium paid towards the policy is exempt from taxes up to Rs 1.5 lakhs. Thus, investing at an early age, save more money on taxes. 

Conclusion 

Death is the Inevitable Universal truth of life that cannot be reversed, but one can be prepared to protect his/her family members against any financial burden. Choose your plan wisely and invest at an early age.

Written By: PolicyBazaar
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