Life insurance is generally perceived as an investment that can be considered at a much later point in life, when you've gotten older. Young investors often tend to focus on high-risk-high-reward investment options such as equities and commodities. Even conservative millennials tend to opt for investments like fixed deposits or debt mutual funds. Insurance is passed over in favour of investment options that promise quicker monetary rewards.
However, the fact remains that investing in life insurance early comes with many advantages. Once you've learned of the benefits of investing in life insurance plans early in your career, you'll understand why it should be an essential part of your retirement planning. So, here's a look at the many advantages of buying a life insurance plan at an early age.
Buying life insurance at an early age can cost you less money in the long run. Factors like age of the applicant and their general health condition are often considered by the insurer to determine the premium payable. When you're in your twenties or thirties, you tend to be in better health. This results in premium charges that are more affordable that the costs charged to older investors. Another reason life insurance plans cost less when you buy them at an early age is that your risk of dying is much less when you're younger. So, to take advantage of this provision, it's advisable to invest in life insurance early in life.
When you buy a life insurance plan at an early age, your money has a longer time to grow. As a result, the death or maturity benefits receivable at the end of the policy's term is also greater if you invest in your twenties. For instance, if you buy a life insurance plan at 25 and continue paying premiums until you're 60, your money has 35 years to accumulate into a retirement corpus. On the other hand, if you buy the same life cover at 40, you only have 20 years to make your funds grow. Investing early can thus increase the cash value of your investment in the long run.
Generally, by the time they reach the age of retirement, most people would have accumulated a sizeable corpus to help keep their family financially secure. By the age of 50 or 60, most people's children would have attained college-going age or may have a job of their own. However, when you're younger and still at the start of your career, your family may be in a more vulnerable position. In the unfortunate event of your demise, your spouse and young kids will find it harder to cope without a financial safety net. Investing in a life insurance plan at an early age can give your dependents this advantage.
Aside from the advantages mentioned above, life insurance plans also offer tax benefits to the investor. Section 80C of the Income Tax Act specifies that the premium paid for life insurance during a financial year is deductible from the total income of the investor. This benefit can be claimed for premium payments up to Rs. 1.5 lakhs for each financial year. So, if your annual premium payments come up to Rs. 1 lakh, you can claim the entire amount as a deduction from your income. This, in turn, lowers your tax liability. If you buy life insurance when you're younger, you can enjoy reduced tax burden at an age when you need it most.
With Canara HSBC , you can invest in a life insurance plan right from the time you attain 18 years of age. You can also buy insurance that meets your specific requirements, and plan for a protective cover depending on the stage of life you're at. Canara HSBC offers plans for young people, married people, married investors with kids, and retirees. You can also choose your plan according to your financial objectives, which may involve pure protection or managing and growing wealth. So, invest in a life insurance plan at an early age to enjoy all the advantages that comes with this smart financial move.
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