Tussle between urgent versus important impacts financial planning in a big way. It is very common for people to constantly delay buying insurance because there are immediate expenses to deal with like school fee, home rent, appliance installments, car loan and so on.
Term insurance clearly falls in the category of important and, ideally, should be dealt with sooner in life than later. An integral part of personal financial planning or NRI personal finance planning.
In simple terms, if something were to happen to you, your family members will receive the insurance benefit in the form of a lump sum amount insured under your term insurance.
Also important to note that if the claim arises in policy then the sum assured paid to the nominee is tax free under Section 10(10)D.
Whether you are an Indian national living in India or a Non Resident Indian (NRI) living abroad, do think about buying the best term insurance product sooner than later. Here are some clear advantages of buying term insurance at a younger age.
Benefits of Buying Term Life Insurance at an Early Age
1. Lower Risk of Health Issues
Insurance companies may require you to get medical tests done before offering you a term insurance plan. Medical test results will tell them more about your current health condition, which determines the premium of a term plan. At an early age, you are most likely to be healthy and free from any severe health problem.
To an insurer, it means that the chances of you filing a claim in the near future would be low. Accordingly, they won’t hesitate to process your term life insurance application and give you the best plan based on your needs.
2. Lower Premium
The premium that you need to pay for a term life insurance plan depends on your age. Check online term plan premium calculators to get an estimated value of premium at different ages. For example, the term insurance premium for a 30-year old non-smoking male for a life cover of Rs. 1 crore or approximately USD 132,ooo would be around Rs. 8,300 or USD 110 to be paid till the age of 60.
Calculate the premium at a higher age, and you will find that the premium is higher, directly proportional to the age you enter.
It means that you will get to save more money by buying a term plan at a lower age. Alongside, it will also ensure that buying life cover does not overwhelm other financial liabilities in your life.
3. Higher Tax Benefits
A term life insurance plan comes with tax benefits other than ensuring financial security to your family. You can consider these benefits as a bonus of buying a term plan. It offers tax-exemption benefits under Section 80C of the Income Tax Act. The upper limit of saving tax under this section is Rs. 1.5 Lakh or approximately USD 2,000. The premium is deducted from your total income to help you save income tax.
4. Flexibility to Choose Add-ons
Other than the basic life cover, term insurance plans come with additional benefits via add-ons that you can choose voluntarily. You should know that your eligibility to buy these add-ons does depend on your age. Term insurance plans from renowned insurers such as Max Life Insurance comes with various add-ons, such as critical illness cover, accidental cover and premium waiver cover. You can select these add-ons based on your affordability.
Moreover, the selection of add-ons increases the total premium. However, the benefits you get with them does worth the price to be paid.
5. Peace of Mind
A Primary cause of stress in life is the fear of not having a financial backup for your family when you won’t be around. This stress may then end up causing other issues in life, such as lack of work-life balance and life-threatening ailments. However, you can be at peace when you have bought a term life insurance plan. Your insurance company will be there to support your family in tough times.
Disclaimer: Opinions expressed in this article are the author's personal opinions and do not reflect the views of Connected to India. The management of the company does not assume any responsibility or liability for the article.