Term insurance plans are the best way to fulfill your obligation towards your family and dependents even when you are not yourself. It provides financial help to your family in your absence. Taking a term plan at a young age has different benefits. But it does not matter much for today’s youth, which is wrong. A survey on term insurance targeting youth was conducted by Max Life Insurance and Kantar IMRB. The survey revealed some shocking facts. Accordingly, only 45 percent of the people participating in the survey were aware of term insurance and only 17 percent had term policies.
It is often seen that youth are more interested in spending on good food, expensive clothes and gadgets. Insurance is not their priority. The main reason for this is due to lack of liabilities and non-dependent members at an early age. But keeping in mind the future, we should take a term plan at an early age. Through this article, we are going to tell you about choosing the best term plan at an early age.
Why should you buy term insurance at a young age?
During the young age, insurance companies offer plans at a lower premium. Also, the premium increases with age, because you are more healthy at a young age and your health starts to decline as you age. There is also a risk of serious diseases like heart disease, diabetes, stroke etc. in old age, this increases the risk of insurance companies.
You can understand the benefit of taking term insurance at an early age from the example given below. If you get term insurance from Aegon Life Insurance Company Limited to get a lump sum amount of Rs 1 crore, then you have to pay the following premium amount at different ages.
- At the age of 25, a premium amount of Rs 6713 is to be filled annually for a period of 40 years on purchasing the policy.
- A premium of Rs 7970 is required to be filled annually for a period of 35 years on purchase of policy at the age of 30 years.
- The premium amount of Rs 10187 is to be filled annually for a period of 30 years on purchasing the policy at the age of 35 years.
- At the age of 40, a premium amount of Rs 13,700 is to be filled annually for a period of 25 years on purchasing the policy.
- The premium amount of Rs 19848 is to be filled annually for a period of 20 years on purchasing the policy at the age of 45.
How to decide the amount covered?
Take care before deciding the cover amount. You decide the amount of coverage that is sufficient to pay your liabilities and other expenses. According to financial experts, the cover amount should always be at least 15-20 times of your annual income. If your annual income is Rs 5 lakh, then the cover amount should be 1 crore. Also, if you have currently taken a loan, then consider it and add its amount to the cover amount as well. For example, if you have a home loan of Rs 25 lakh and a car loan of Rs 5 lakh, then your coverage amount should be Rs 1 crore 30 lakh.
Get a medical test
Some insurance companies allow young people to buy term plans without medical tests. But do not buy a term plan without having a medical test. By conducting a medical test, you will get to know about the real state of your health and the premium will also be less if you are healthy. A relatively higher premium is required to be paid without taking a medical test. If you have a disease and you take a term policy without a medical examination. If the company later learns about it, it may even dismiss your claim. Therefore, do a medical test.
Choose the appropriate duration
The term of a term insurance policy is also as important as the cover. The duration of the policy should neither be too long nor too short. Usually, it should be around 65-70 years of age. If at the age of 30 years you buy term insurance for a period of 20 years, then the policy will be terminated when you are 50 years old. You will need a policy even after this age and taking a policy at this age is expensive. So choose the appropriate duration.
Riders provide you with additional benefits. You can add these to your term insurance plan. You can add riders when purchasing a new insurance policy or at the time of renewal. Also, under Section 80D and Section 80C of the Income Tax Act, 1961, the tax benefit is given on the premium paid for term insurance riders, ie it is not taxed.
Various term insurance riders offered by insurance companies
Aegon Religare ITEM
- Critical illness rider
- Premium Rebate Rider
- Women benefit from critical illness
- Disability income benefit
Bharti AXA eProtect
- Accidental death benefit
- Hospital Cash Benefit
HDFC Life Click 2 Protect Plus
- Accidental death benefits
- Accident income benefit