It is said, Better Late than Never. But, this doesn’t apply everywhere. You should avail a Term Life Insurance Plan, at least in your early 30s. What difference will it make? Let’s find out.
Until you reach the 30s, you may struggle to get a good job. Now, when you hit your 30s, you may enjoy a decent career. You earn well, are in good health and are planning to start a family. You must have also started investing to buy a house or a car. In short, you become more responsible in your 30s.
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Responsibility is an on-going process. It never ends. Let’s face it, you need money to survive. Therefore, you are not really responsible until you insure your life. Insuring your life is a selfless act. Availing a term life insurance plan makes sure your family has the financial support in your absence.
So, when should you buy a term life insurance plan? The best age to buy is by the time you turn 30. Do not wait until it’s too late. Buying a term life insurance by the time you turn 30, has great advantages. Read on to find out more:
You seek financial advice on which is the best financial avenue to invest your hard-earned money. People may suggest you invest in mutual funds, whole life insurance policies, pension plans, and so on. These investment options help you save for retirement and you should go ahead and invest in one or two of them.
But, having a term life insurance policy is a must. It helps you get protection for a much bigger risk. You may have availed a home loan or planned to send your children abroad for higher studies, plus you have to ensure your family’s financial security in your absence. Achieving all this is possible if you have some kind of financial arrangement like term life insurance.
Term insurance plans cost much lesser than whole life insurance products. Let’s take the worst case scenario:
Say you are 30. For a sum assured of Rs 1 Crore, a smoker has to pay an annual premium of around Rs 15,000. Monthly premium will be Rs 1,250. If you are earning around Rs 5 Lakhs a year, your premium will be just 3% of your annual income. Is this too much?
Insurance is all about covering risks. You pay premiums so that your risk is covered. Therefore, the logic is simple. The earlier you avail term insurance, lower are the premiums you pay. Still not clear?
The older you grow; chances are you will not be as healthy as you were in your 30s. Thus, the cost of insuring you will be higher, which will be reflected in higher premiums. The younger you are lower will be the premiums charged.
Say, you are a 30-year old non-smoker. For a sum assured of Rs 1 Crore, you will have to pay an annual premium of around Rs 10,000. Monthly premium will be Rs 850. If you are earning around Rs 5 Lakh a year, your premium will be just 2% of your annual income. A great deal again!
One has to undergo a medical check-up while availing term life insurance, after turning 45. Also, you might be refused coverage because of lifestyle-related diseases.
Unlike the premiums on a health insurance policy, the term insurance premium remains the same for the entire term. Therefore, if you avail a term insurance early in life, you lock lower premiums.
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.
Term life insurance plans help save taxes. So, term insurance brings you good news! The premium that you pay towards this plan can be claimed as a deduction under Section 80C up to Rs 1.5 Lakhs a year.
Loyalty to your employer is great. But, loyalty to the term plan offered by him is foolishness. It is not great to rely only on the term plan offered by your employer. You may not always work with this employer, your entire life. You hit the peak of your career after 35.
To grow, you have to switch jobs and explore better career opportunities. As soon as you switch jobs, the term insurance plan of your former employer will no longer benefit you. Therefore, be wise and get a separate term insurance plan for yourself and family.
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.
Be Wise, Get Rich.
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