Buy Term Insurance Early vs Late - When to Buy & Why It Matters?

Written by : Knowledge Center Team

2025-11-29

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Term Insurance is one of the most powerful tools to secure your family’s financial future. The biggest confusion in the mind of an individual is whether it is better to buy term insurance early in life when premiums are low or wait until your income is higher.

Financial planning is essential for a better future. It is all about making smart and informed financial decisions. In the blog, let's analyse both options in detail, using examples. Stay tuned till the end.

Key Takeaways

Buy term insurance early to block lower premiums and save lakhs over time.
Secure coverage before health risks raise your premiums or lead to rejection.
A term plan offers peace of mind by covering loans and future expenses.
Start with a small coverage and upgrade it later without overpaying.

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Why Buying Term Insurance Early is a Smart Move?

Some of the benefits of buying term insurance early are as follows:

Lower Premiums, Big Savings- Term Insurance premiums are blocked at the time of purchase, which means the earlier you buy, the lower your cost. At a young age, you can enjoy cheaper premiums because of lower health risks. After a certain age, insurers charge higher rates due to increased chances of medical conditions. Delaying the purchase can lead to expensive premiums, medical tests, or a great chance of policy rejection.
Example:

For a ₹1 Crore cover with a 30-year policy term:
- At age 25 → ₹8,000 per year
- At age 35 → ₹15,000 per year
- Total paid by age 55: ₹2.4 lakh vs. ₹4.5 lakh

You can save over ₹2 lakh in premiums by purchasing early!

Easier Approval, No Medical Issues- Young and healthy individuals can secure term insurance easily without medical tests or extra charges. However, delaying the purchase increases the risk of developing health conditions like diabetes, hypertension, or obesity. These issues can lead to higher premiums, additional medical tests, or even policy rejection in severe cases. Buying early ensures smooth approval and cost savings, while waiting may result in complications and expensive premiums.
Longer Coverage & Peace of Mind- Buying term life insurance plan early provides financial security before major life events such as marriage, children, or loans. If something happens to you, your family will have the money to cover expenses and debts.

Did You Know?

Many term policies are also “convertible,” as they can be converted into a permanent life insurance policy.

Investopedia

Why do Some People Wait to Buy Term Insurance?

Here are several reasons people wait to buy term insurance:

Higher Income = Higher Cover Later:

As you progress in your career, your financial responsibilities will increase. You may need more coverage to secure your family’s future, which may not be possible if you bought a smaller cover early on.

However, upgrading an existing policy is always an option. Many insurers allow you to increase coverage later without buying a new policy.

Shorter Payment Period: A person who buys term insurance at 40 would pay premiums for 20 years instead of 30 years if they had bought it at 25. This means fewer years of payment but at a higher cost per year.
Investment Priorities: Some people prefer to invest their money in other instruments before committing to an insurance premium. If they can generate higher returns through mutual funds or stocks, they might feel waiting will be a best choice.
Example:
- If a 25-year-old invests ₹7,000 per year (saved from lower premiums) in an equity mutual fund with 12% annual returns, it could grow to ₹20+ lakh in 30 years!
- However, without term insurance, their family remains unprotected.

What’s the Best Strategy?

Buy Early, Even If It’s a Smaller Coverage: A simple way to balance both perspectives is to buy a basic term insurance plan early and upgrade later when needed. Instead of waiting for a higher salary, secure at least ₹50 lakh or ₹1 crore early on.
Upgrade When Your Income Grows: Most insurers allow you to increase your sum assured later. If you buy ₹1 crore coverage at 25, you can upgrade to ₹2 crore at 35 when your responsibilities grow.
Consider Your Financial Dependents: If you are single, you may not need a large cover immediately, but coverage is essential in the future when responsibility comes to loans or liabilities.

Conclusion

Buying term insurance early saves money, ensures easy approval, and provides long-term financial security. Waiting might allow a larger coverage, but comes with higher premiums and potential medical risk. The smartest approach is to start with a basic plan early and upgrade as your income grows. This ensures financial protection at the lowest cost while adapting to your increasing responsibilities.

Glossary

Sum Assured: The guaranteed amount paid to the nominee in case of the policyholder’s demise.
Rider: An additional benefit that enhances a term insurance plan, like critical illness coverage.
Term Insurance: Term insurance is a type of life insurance that offers financial protection for a set period.
Mutual fund: A mutual fund is a pool of money that is invested in stocks, bonds, and other securities.
Financial Dependents: Family members who rely on the policyholder’s income for their financial well-being.

FAQs

The best time to buy term insurance is as early as possible because it leads to lower premiums, easy approval and affordable long-term coverage.

Yes, buying term insurance later leads to costly premiums because of higher health risks.

Yes, the simple strategy is to start with the basic plan and upgrade the insurance coverage later.

Yes, but the chances of approval might be low, and if accepted, the cost of premium is high.

Insurers offer a grace period if you miss a premium payment. If you do not pay within this time, the policy may lapse, and coverage will be stopped.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.