Top 5 Reasons You Must Take Term Insurance Before You Reach 30

Top 5 Reasons You Must Take Term Insurance Before You Reach 30

When it comes to life insurance, you cannot ignore the most affordable and relevant-to-all term insurance plans. Term insurance plans provide unmatched financial security both to you and your family.

Because term plans have the lowest premium rates, it is always recommended by experts and sundry. Despite knowing the importance and cost-effectiveness of a term plan, most of the people delay buying it. When people are young, death seems a far-fetched idea to them. As a result, people generally buy a plan late in their life. But, is it a wise decision to make?

As per the experts, it is not a wise decision at all. Ideally, the right time to buy a term insurance plan online is before you turn 30. Here are some reasons why you should do so.

1.) Most sought after investment Product

More often than not, financial planners recommend people to buy a term plan before investing in an SIP, mutual fund or retirement plan. Because, as per their logic mutual funds and pension plans only help you save money for your sunset years. You start investing in these investment products because you want to have a good amount of money secured before you retire.

However, investing in a term insurance plan will help your family avoid the financial consequences caused due to your unexpected demise in the most affordable way. Even if you’re not around, your family won’t have to worry about day-to-day expenses or other financial liabilities.

The best part is, term insurance cost you much lower than other investment products which is a little 3% of your annual income against a coverage of 20 times of your current annual income.

You can always calculate your term insurance premium using online term insurance calculators available on different comparison websites.

2.) Buying young means lower premiums

Before you hit 30s, you are generally considered to be healthy and fit. The lifestyle diseases such as blood pressure, diabetes, etc. and substances like pesticides in food, smoke, alcohol yet haven’t crossed the unhealthy levels or taken a toll on your body.

It eventually leads to these 2 conclusions:

1. The younger you are while buying a term insurance; the lower will be the premium rates for you. For instance, a 30-year old non-smoker individual can get a cover of Rs 1 crore for a premium of worth Rs 552 per month. Whereas, for a 40 year old non-smoker individual, the same cover can cost approximately Rs. 1400 per month which is 3 times of the premium decided for a 30 year old individual.

2. In addition to, the applicants are required to undergo a medical check-up while applying for a term insurance plan. The insurance provider has the right to decline you a cover in case you have a lifestyle related disease. The possibility of such rejections is definitely higher as one reaches her/his 40s.

So, a young and healthy individual means relatively cheaper term insurance premiums!

3.) Lock the Premiums Amount

Normally, in a health insurance, your premium keeps on increasing every year. However, in case of term insurance plans, the premium amount is fixed for the complete tenure of the policy. It means that buying a term plan in your 30s will allow you to get a lower premium for the entire policy tenure.

A term plan generally works like this:

Ideally, you should choose a term plan that will cover you till the age you will have financial liabilities to take care of. Your family may be dependent on you until you reach the age of 60 years. You may also have some loans to pay-off. As per a basic calculation, an individual buying a term plan at the age of 30 years will need a cover for at least 30-35 years.

Any other thing that comes with a shorter duration than this is not going to be sufficient for your family when they’ll actually need it.

4.) Riders

Term insurance plans offer a host of add-ons or riders that enables you to get additional benefits at nominal cost. Partial or permanent disability, accidental death, waiver of premium, critical illnesses and income benefits are some of the available riders with a term insurance plan.

There are no set rules as to who can avail which add-on. It all depends on individuals’ needs and preferences. For instance, if someone works in the heavy industries, s/he can opt for a permanent and partial disability or a waiver of premium rider.

As per experts, one should not buy a rider just for the sake of it as it comes at an additional cost. The pricing rates for these riders vary from one insurer to another. You should also make sure to go through the fine print carefully and watch out for the exclusions.

5.) Tax-Rebate

Individuals are always on the look-out for different options to invest and save some money on income tax. Well, here is the good news! The premium paid towards buying a term insurance policy can be a part of investments u/s 80C of the Income Tax Act. Also, the death benefit paid to the nominees of the policyholder comes under tax-free income.

Final Thoughts:

Turning 30 is a major phase in any one’s life and it’s always a good decision to be prepared in advance for the bitter surprises thrown by life. Therefore, buying a term insurance plan is the most responsible and the right thing to do. After all, if experts are giving you an advice you can be sure that there would be substantial reasons behind such advice.