Life insurance at an early age may sound unnecessary, but its importance cannot be denied. At a young age, we are all carefree, passionate about our dreams, and want to fly high. We are not bothered by our responsibilities and think that we can deal with them later.
And that’s the point that makes the difference. People who start investing early get all the benefits of life insurance for lower prices and have the edge over those who start late. How and why, well, the answers to these questions will be looked at in this article.
Why invest in life insurance when you are younger?
With life insurance awareness steadily growing in India and the increased convenience of buying online life insurance plans, more and more people are opting for life insurance in their 20s. If you are also a young professional thinking about a financial portfolio, you should understand why it is essential to get life insurance in your 20s. This is an important question to answer. Here are some of the advantages that you can expect:
- Pay lower premium amounts – One of the benefits of life insurance purchases that are made early is the lower premiums. When you are younger, you are naturally deemed to be healthier than people in their 40s or 50s. Hence, you can get lower-term insurance premiums, which means that you will not have to pay more as you age as well. You are naturally taken as a customer with a lower health risk by the insurance company when you are younger.
- Longer Tenure of Coverage –Another considerable advantage of investing in online life insurance in your 20s is the lengthy duration of coverage. The earlier you start, the longer you can stay insured, with periods up to 20 or even 30 years on average. Hence, you can pay a lower price to stay insured for the long haul.
- Coverage Enhancement Chances – Being young and without significant financial responsibilities, you can latch onto the opportunity to boost coverage with several riders or add-ons, which come for extra costs. Yet, since you are already getting a lower premium amount at this stage, you can consider riders that suit specific needs, including accidental death benefits, premium waivers, critical illness benefits, and so on.
- Higher Coverage –When you are young, you can get a comparatively higher coverage amount for the premium amount that you pay, in comparison to, say, an individual in his 40s or older. You can get a high coverage amount that will remain intact, and you will not have to pay more to obtain the same as you get older.
- More scope to make other investments – If you are done with life insurance when you are young, then you will have more money in the future to invest in different avenues for investments. This means that every raise or increase in income can then be utilized for investing in varied options without worrying about escalating insurance costs. This will only be possible since you will get a lower premium amount locked in for a longer duration by starting young.
- Tax Benefits –You can expect sizable tax benefits under Section 80C. You will get deductions up to Rs. 1,50,000 on your premium payments for life insurance plans under this section. If you have added a critical illness rider to your policy, then you can also get tax deductions of up to another Rs. 25,000 per year on the premiums paid for the same.
Hence, life insurance is always a better investment option when you are young, i.e., in your 20s. In fact, life insurance should be the first addition to your portfolio. Once you have secured your family financially, you can start planning to invest in other growth-yielding options, strengthening yourself on all fronts by the time you reach middle age.