Why Start Young With Life Insurance ?

When it comes to determining the right time to buy life insurance, the earlier you start the better. However, only  3.2% of the Indian population has invested in this important financial instrument. A common misconception among the masses is that a life insurance policy is only for older people who are financially settled and have families to support. 

While it’s true that life insurance’s primary purpose is to safeguard your dependents’ financial future after you’re gone, starting late prevents you from enjoying the full spectrum of benefits it offers. 

You see, investing in life insurance early not only prepares you for the unexpected but also allows your money to accumulate and grow over the years.

Why Get A Life Insurance Policy Early ?

When it comes to determining the right time to buy life insurance, the earlier you start the better. However, only  3.2% of the Indian population has invested in this important financial instrument. A common misconception among the masses is that a life insurance policy is only for older people who are financially settled and have families to support. 

While it’s true that life insurance’s primary purpose is to safeguard your dependents’ financial future after you’re gone, starting late prevents you from enjoying the full spectrum of benefits it offers. 

You see, investing in life insurance early not only prepares you for the unexpected but also allows your money to accumulate and grow over the years.

Why Get A Life Insurance Policy Early ?

Buying life insurance early offers several benefits. Insurance companies evaluate factors like your age, health, lifestyle, and family medical history to determine the policy terms. When you’re young, you’re typically healthier and pose a lower risk of making a claim, often resulting in more favourable terms and lower premiums. Also, you have less responsibility and fewer recurring expenses, making premium payments easy and a smart decision. Here’s why:

• Protect your loved ones

One of the primary benefits of life insurance is that it protects your loved ones from financial difficulties in the event of your untimely demise. When you’re young, you might not have the responsibility of a spouse, kids, or ageing parents. However, planning for the future effectively involves considering how your obligations will evolve with time. 

By investing in life insurance early, you can provide a financial safety net for your loved ones should anything happen to you unexpectedly. This becomes all the more important if you’re the family’s sole breadwinner or have existing debts like education loans, personal loans, etc.

• Lower premiums

Low premiums are one of the most significant benefits of life insurance at a young age. Take the example of Sonam and Anisha. Sonam, 20 years old and Anisha, 40 years old, decided to purchase a term insurance plan for up to 60 years with a coverage of ₹1 crore. Sonam pays an annual premium of ₹6,000 for 40 years, while Anisha pays ₹13,500 for 20 years.

Due to starting at a young age, Sonam not only enjoys more affordable premiums but is also covered for double the term as Anisha. 

• Easy approval

Getting approved for an insurance plan is easier when you’re young. This is because, with age, you’re more likely to develop health conditions that can result in high premiums or even certain exclusions. 

As a young customer, you’re in better health with fewer medical issues, which reduces the risk of making a claim. This makes you more appealing to insurers and ensures you get the needed coverage without any hassle.

• Lifetime tax benefits

Premiums paid towards your insurance plan are eligible for tax deductions up to ₹1.5 lakhs under Section 80C of the Income Tax Act, which can reduce your taxable income. The best part is that this is not just a one-time benefit but extends throughout the tenure of the policy, reducing your tax liability for decades to come. Additionally, if your family makes a claim during this tenure, they can avail of tax exemptions on the claim amount under Section 10(10D).

• Create a long term financial plan

An early life insurance policy allows you to create a long-term financial plan with a solid foundation. Policies like Unit-linked Insurance Plans (ULIPs) come with an investment component that grows over time, allowing you to leverage the power of compounding. 

For example, Kartik, 25 years old and Aryan, 43 years old, decide to invest in a ULIP with a sum assured of ₹1 crore maturing when they’re 60. Both pay the same premium and have the same rate of return. But since Kartik remains invested for longer (35 years), he will receive higher returns than Aryan (15 years). This will help him build a substantial corpus for his long-term financial plans.

• Start legacy and inheritance planning early

Buying life insurance at a young age allows you to start legacy and inheritance planning early. It helps you create a guaranteed sum that can be passed on to your beneficiaries or loved ones, ensuring they are taken care of in your absence. 

This can help them maintain their lifestyle, pursue higher education, or start a business without any financial constraints.

Key Takeaways

There are several benefits of life insurance at a young age like lower premiums, easier application process, tax benefits, and more. It is not just a financial safety net but also an investment in your future and your family’s security. Additionally, using platforms such as PhonePe can simplify the process of selecting and buying the right life insurance.