There are very few things assured in life, and long-term wealth and safety from contingencies are not among them. Taxes and inflation, however, are a certainty. At least, not until you do something about it.
Life insurance plans are one of the few investment options capable of preserving your wealth over a long period. Meaning, if you can have a life insurance plan early, you can preserve your savings from both inflation and taxes for a long time.
So, the question, “Can you buy life insurance during your college years?” Or, “Do you even need life insurance as a college student?”
When does a College Student Need a Life Insurance?
Contrary to a popular belief that buying life insurance as a college student makes no sense, there are many situations in which life insurance can surely help you, even in college.
1. If you have a Student Loan
Student loans, popular as Education Loans in India are the loans that you as a student can take, usually along with a co-applicant to fund your higher education. The interest rates of student loans are lower than regular ‘Personal’ loans.
What if you die in between your education and there is still a major chunk of loan left to be paid? Your co-applicant will be left with all the burden.
But if you have taken a life insurance policy, the sum assured can be used to pay all the loans and debts you had.
2. If you have Dependents
Many decide to get married, while they are still pursuing their higher education. Also, some start their higher education a little late as well. If you fall in any of the above categories, then you should consider a life insurance policy.
It will take care of your spouse as the amount received can be used for paying off funeral and other one-time costs. If you have a child, he can use the money to pay for his education as well.
3. To Protect your Parents
Our parents do all the hard work and make sure that we get to live a comfortable and stress-free life.
As we grow up, it becomes our responsibility to take care of them. But what if you die unexpectedly and are not able to take care of them.
A life insurance policy will provide them with a sum assured, that they can use it to take care of themselves. It can also be used to pay the loans that they took for your education.
When should a College Student Buy a Life Insurance?
Now that you know the importance of having life insurance even from an early age. Here’s how you can purchase a policy for yourself.
1. Use your Stipend Money
A college is a great place, often to spend money. However, if you are also trying to earn while you learn, you can use some of these earnings as savings.
2. Safekeeping Financial Gifts
There can be times when a relative of yours can give you a sum of money as a present. Money can be received from grandparents or other relatives. If you have received a considerable sum from them or even your parents during your college, you will certainly look to make use of this money.
You need to find an investment that will keep your money safe.
Buying a life insurance plan such as a term plan or savings plan will not only keep your money safe but also build your habit of saving and investing from a young age.
Advantages of Buying a Life Insurance from a Young Age
Granted, that the age of early or mid-’20s is a time to have fun, and planning for your future life may not be the first thing on your mind. But starting to save and invest from an early age will do you loads of good in your future.
Here are the benefits of buying the best life insurance policy:
1. Low Premiums
One of the biggest reasons you should take a policy early is because of premiums. The premiums that you will pay when you decide to buy at an age of say,25, will be much lower than the premiums that you will pay at the age of 30-35.
The cost of insurance increases with age. This is because at a younger age you are less likely to die and develop a disease, thus being ‘less risky as per insurance company.
2. Safety of Investment
Life insurance policies are one of the safest investments. They keep your investment protected and make sure that your family receives the sum assured in case you die during the policy term.
3. Benefit from Compounding Growth
When the interest you earn on the principal is reinvested in the policy to get further interest, this is known as compounding. In simpler words, it is interest gained on interest.
The longer you stay invested in your policy, the more time you allow your money to grow exponentially.
4. Save Taxes
All the life insurance policies provide you with tax benefits as well. These can reduce your tax liability which will help you save money.
Life Insurance Plans for College Students
Canara HSBC Oriental Bank of Commerce Life Insurance offers some of the most versatile life insurance plans for college students. The best part is that you can complete all formalities online.
Based on the purpose of getting a life insurance plan you can select any of the following three:
1. iSelect Smart360 Term Plan
a) Protect your family and parents from your untimely demise and falling prey to a critical illnessb) Nominal investment large safety capc) Increase the life cover upon marriage and other future life events
2. Guaranteed Savings Plan
a) Offers guaranteed returnsb) Invest one time or over a few years based on your incomec) Maturity value is tax-freed) Also provides life cover
3. Invest 4G
a) Invest in equity funds with the safety of insuranceb) Use automated strategies to beat the market trendsc) Allows partial withdrawals after five yearsd) Maturity value and withdrawals are free from tax
With these plans, you can safeguard your parents and family during the college years and beyond.