As time passes, financial obligations begin to mount. When you are young, you are relatively carefree, but as you get older, marry, and establish a family, your financial needs increase. In such cases, your dependents incur a significant financial loss if you die prematurely. As a result, a term insurance plan may come to your family's aid by compensating them for the financial loss that they incur.
While purchasing term insurance later in life makes sense, is it advisable to do it in your twenties?
Is it too soon to buy term insurance in your twenties?
You are more likely to be healthy in your twenties. Given this, many young adults in their twenties avoid purchasing a life insurance plan. But what about unexpected accidents? Are you protected against such occurrences?
Accidental deaths are unexpected and sudden. They can also cause financial hardship for your family, regardless of your age. Furthermore, unexpected medical emergencies, such as a pandemic, can result in unanticipated deaths. Purchasing term insurance, even in your twenties, is ideal for covering such unforeseen events.
The advantages of purchasing term insurance in your twenties
Here are some of the advantages of purchasing term insurance in your twenties:
- Complete security
Even if you are in good health, an unforeseen tragedy can cause financial hardship for your family when you are not present. When you get a term plan in your twenties, you can obtain coverage at a younger age. This policy safeguards your family's financial necessities in the event of your untimely death as a result of a sickness or injury.
Furthermore, if you are young and healthy, you are unlikely to have any pre-existing medical conditions. This may allow you to choose a high sum assured and a broad scope of coverage with few constraints or limitations. You can also use the term insurance calculator to get the best sum assured and then select the coverage.
- Reasonable premiums
A term insurance policy's rates are mostly determined by your age. When you are young, your premium will be cheap. You can lock in a lower premium that will last the duration of your policy, even if you get older.
Furthermore, while you are younger and have no medical difficulties, there is no premium loading. This also lowers the premium and makes it cheaper.
- Prepare for an emergency
Emergency planning is an essential component of financial planning since it protects your investments in the event of an emergency. A term insurance policy is useful for emergency preparedness. It covers untimely deaths and financially supports your family in your absence.
When you are not present, your family can use the benefit from a term insurance policy to meet their financial obligations. This ensures that your money and assets are protected and can be used for your family's financial goals.
- Debt management
Term insurance coverage might also assist your family in managing your debt while you are away. Your family can pay off your debts with the benefit of the term plan if you are not present and your debts are unpaid.
Furthermore, mortgage redemption plans, which are term plans tied to a specific loan, are available. The plan's sum assured decreases on a regular basis as your debt decreases. In your absence, the plan repays the remaining portion of the loan so that the debt burden does not fall on your family's shoulders.
Thus, a term insurance plan makes sense for managing your debt and ensuring its payback even if you are not present.
- Tax advantages
You may have the option to claim tax breaks on the premiums you pay for term insurance. The premium will be deductible under Section 80C of the Income Tax Act of 1961 up to Rs.1.5 lakhs, subject to the Act's limitations. This deduction would reduce your tax liability and allow you to save more money.
In conclusion
Your age has no bearing on death. It can strike at any time, and the only way to minimize financial consequences is to plan ahead of time. A term insurance policy protects you against untimely death. It makes sense even in your twenties because of the many term insurance features available.
