When you are young, you may not think seriously about insuring your life. It is important to understand that starting your financial planning early will put you on the right track to building a surplus corpus that can ensure a healthy financial future.
While planning your investments, one thing that should be on top of your list is to buy life insurance. In today’s turbulent times, it is essential to secure the monetary well-being of your family against the uncertainties of life. It does not matter whether you are young or old, providing financial protection for your family is necessary. Out of the different types of life insurance policies available in the market today, term insurance plans in India are emerging as one of the most popular options. So, if you are wondering what is term insurance, then read on to understand its various features and benefits.
Term insurance is a pure protection plan that does not involve any saving or investment component. One of the term insurance benefits that makes it a preferred instrument is the low premium. Besides this, term insurance plans offer a high sum-assured that allows your nominee to live a financially independent and stress-free life in case something unfortunate happens to you.
If you have just started your career, it is advisable to invest a part of your income in a term plan. Procuring a term plan at a younger age is cost-effective, as you can reap its benefits for a longer duration.
Reasons to invest in a term plan at the start of your career
By investing a term plan during an early phase of your career, you can:
- Shield your family
No one knows what the future holds for you, and since life is uncertain, it is important to safeguard your family’s financial future. What if you are the sole earning member of the family? Have you thought of the financial hardships your loved ones will have to face in your absence? Do not endanger the financial stability of your family. It is recommended to invest in a term policy as early as possible. When you know that your family is financially secure, it will take off a burden from your shoulders and allow you to thrive in your career.
- Pay a lower premium
When you are young, the chances of mortality are low as compared to an older policyholder. This means that the insurer does not see you as a risky policyholder, and so they offer you a budget-friendly premium.
- Get insured for a longer duration
Apart from the advantage of a cost-effective premium, you can get term insurance coverage for a longer tenure if you invest at an early age. This ensures that your family gets monetary protection for a longer period during various stages of life.
- Avail of tax exemptions
One of the most promising term insurance benefits is that this plan offers tax deductions. Here, you can claim a deduction for the premium paid towards the term plan under Section 80C of the Income Tax Act, 1961. The maximum permissible limit for this exemption is INR 1.5 lakh per year. Besides this, the death benefit that your nominee will receive in case of an untoward event is tax-free under Section 10(10D) of the Act.
- Utilize it as a contingency plan for health emergencies
A hectic work life, unhealthy eating habits, and incorrect lifestyle choices are some reasons that can damage a person’s health. While you are young, health-related risks are relatively lower. When you grow old, the chances of getting affected by chronic conditions, like obesity, hypertension, and diabetes, are higher. If you face any health problems, you will have to pay a higher premium. So, it is suggested that you buy a term plan during your youth. Additionally, if you buy riders, like a critical illness rider, you can rest assured, as the insurer will pay you a lump sum in case you are diagnosed with a serious illness.
One of the main advantages of investing in term insurance early on is that the premium will remain fixed throughout the policy’s tenure. Make the most of your term insurance plan and provide your family members with the financial security that they deserve.