Your 20s and 30s are predominantly the years when major life changes take place. Most people tend to get married, have children, buy their own house and find their career take on an upward trajectory in this period of time. The financial decisions that they make during this time have the ability to help them secure their future.
Most people make use of this span of time to invest and grow their wealth. However, you should grab this window of opportunity not only to grow your wealth, but also to protect it. You can do so by investing in a term insurance plan, one of the purest and most traditional forms of insurance.
Today, you can purchase online term plans with just the click of a button. Canara HSBC Oriental Bank of Commerce offers the iSelect Term Plan which is an online term insurance plan that provides comprehensive life cover to you and your loved ones. The plan also offers enhanced coverage with its accidental death and disability riders. You can choose from a number of payout options, ranging from the lump sum to the monthly income options.
With enhanced coverage available at nominal premiums, you should opt for term insurance plans as early as possible.
5 most important reasons to buy term insurance before you turn 30
- Growing your family Typically, the 30s are the age of settling down, getting married and having kids. As your family begins to grow by leaps and bounds, so does the need for financial security. In addition to this, as you hit the big three-zero, your parents, too, may retire and begin to depend upon you financially. With the growing number of dependents in your family, it is essential that draw up a contingency plan for them. A term life insurance is an essential entity as it protects you from high-risk scenarios by ensuring your family’s financial future is secure in your absence. It provides your family with a safety net and allows you the peace of mind to focus on their current well-being.
- Locking a lower premium Term life insurance is also cost-effective. In terms of pricing, term insurance plans are lower than whole
life insurance. And the earlier you purchase term insurance, the cheaper your premiums will be. Typically, the older an individual gets, the higher their chances are of being in poorer health conditions. Due to that, the cost of insuring an older individual is higher. This is reflected in the higher premiums they would have to pay if they were to purchase the term insurance at an older age. Further, an individual has to undergo a health check-up when they are applying for a term insurance after the age of 45.
- Insurance against liabilities During your 20s and 30s, you may need financial assistance to fulfill certain life goals. You may find yourself in need of education loans, mortgages, car loans etc. in order to achieve those goals. While it may seem easy to pay off such liabilities with your steady stream of income now, the liabilities could prove to be a burden on your family, in the event of your absence in the future. This is where term insurance steps in. Term insurance can help cover the repayment of such liabilities in the event of your unfortunate demise. Thus, since the burden of debt repayments may fall during your 30s and 40s, it is crucial you ensure that the loss of your income will not be an impediment to your family’s financial stability.
- Tax Benefits Typically, your career trajectory will see a spike during your 20s and 30s. While this would assuredly mean higher incomes, it would also mean higher tax outgo. Which is why, it is essential you opt for tax-saving instruments like term insurance early on in life, to minimize your taxable income. Term insurance not only offers you a great protective cover, it also comes with heaps of tax benefits. That is, the premium you pay towards your term insurance plan can be claimed as a deduction under Section 80(C) for upto Rs. 1.5 lakh a year. Similarly under Section 80(D) an individual can claim a deductions, if they have opted for a health-related rider along with their term plan (for instance, critical illness insurance). Section 10(10D) focusses on tax deductions on claims ie. death and maturity benefits. Under this section, the payouts you receive from your term plan are tax-exempt.
- Moving beyond the employer offered term plan Solely depending on the term plan that an individual’s employer offers him/her might not prove to be very fruitful for the individual. This is mainly since it is not guaranteed that one continues working with the same company and the same employer throughout their life. Typically individuals reach the peak of their careers at the age of 35. While enhancing and growing their career trajectory, he/she might need to switch positions and companies. Once they switch their company the term insurance provided by that employer will not be useful for them.
A term plan is one of the simplest life insurance policies available and it is crucial for individuals to purchase it sooner in their careers. The sooner their purchase the same, the sooner they can reap benefits such as comprehensive protection, tax savings and economic premiums.