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‘It is never too early to get yourself covered with a term plan’. Life is full of uncertainties and unpredictable responsibilities with never-ending ups and downs. Nowadays, people in their 20s are very well-versed and passionate about leading their lives and building financially stable careers. They realise their responsibilities from a very young age and plan their finances well in advance. Thus, it is a smart decision to buy a term insurance policy as early as you start working. Having a term insurance plan gives financial assurance to you and your loved ones in case of an unfortunate event.
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A term insurance plan is a pure protection plan that protects our loved ones against the biggest risks and uncertainties of life. The term insurance policies cover the risk of premature death and provide a death benefit to the family members which helps them meet their expenses in case of the policyholder’s untimely demise. It is better to buy a term plan at early age. If you avail of a good term plan at a young age, the term plan premium rates is lesser.
Let’s understand this with an example
Youngsters in their 20s are studying or trying to get a new job and most of us enter the professional market to get a student loan for higher studies or business. As a fresher, the salary is relatively low and it will take a few years to pay back the debt amount. In such a case, if you met with some unfortunate event, your entire financial accountability will directly get transferred to your family. Therefore, having a term plan helps your parents from bearing the financial stress and they can pay debt easily.
Various insurance researchers and experts advise buying a term plan at a very early age. But have you ever given thought to this concept? The primary question that comes up to mind is, why it is important to have a term plan at a very early age? Let’s read the below section to know more about why the ’20s is the best age to buy a term insurance plan:
Note: Now that you know that what is term insurance plan you can easily buy a term plan for your loved ones.
Term Plans
Lower premium is one of the distinctive term insurance benefits. One of the important considerations in a term insurance plan is the ‘earlier you buy a term insurance plan, the lower the premium price you have to pay. In your twenties, you may be all healthy and active and you can buy term plan with high coverage at lower premium rates. The premiums are lesser and affordable at early ages as compared to an older person with pre-existing illnesses. This is because insurers decide the premium rate depending on your age. Young people have good health and are less prone to chronic illnesses which will charge lower monthly premiums.
On the other hand, advanced age is an indication of increasing health problems and a higher probability of claims. This is why old people are charged high premium rates. However, it is advisable to purchase a term insurance policy at a young age so that you can save your hard-earned money in the long run.
Let’s understand this with the help of an example:
Below is the sample premium comparison of term insurance plans offered by insurers for 25 years old, 30 years old, 35 years old, and 40 years -old healthy males. The total Sum assured is Rs. 1 Crore.
| Name of the Insurer | term plan in your 20s | Claim Settled Amount (cr) | Entry Age | Maximum Maturity Age | |
| Aditya Birla Sun Life Insurance Company Limited | ABSLI Income Suraksha Plan | 458 | 21-55 years | 70 years | |
| Aviva Life Insurance Company India Limited | Aviva Signature 3D Term Plan | 98 | 18-65 years | 80 years | |
| Bajaj Allianz Life Insurance Company Limited | Bajaj Allianz eTouch | 603 | 18-55 years | 99 years | |
| Bandhan Life Insurance Limited | Bandhan Life iTerm Prime | 86 | 18-65 years | 70 years | |
| Bharti Axa Life Insurance Company Limited | Flexi Term Pro | 148 | 18-65 years | 99 years | |
| Canara HSBC Life Insurance Company Limited | Canara Young Term Plan | 186 | 18-45 years | 99 years | |
| Edelweiss Life Insurance Company Limited | Edelweiss Life Zindagi Plus | 59 | 18-65 years | 80 years | |
| Future Generali India Life Insurance Company Limited | Future Generali India Term Insurance Plan | 33 | 18-60 years | 65 years | |
| HDFC Life Insurance Company Limited | HDFC Click 2 Protect Super | 1,389 | 18-65 years | 85 years | |
| ICICI Prudential Life Insurance Company Limited | ICICI iProtect Smart | 1,950 | 18-65 years | 99 years | |
| IndiaFirst Life Insurance Company Limited | IndiaFirst Life Elite Term Plan | 160 | 18-60 years | 99 years | |
| Kotak Mahindra Life Insurance Company Limited | Kotak e Term | 321 | 18-65 years | 85 years | |
| Life Insurance Corporation of India | LIC New Tech Term Plan | 18,398 | 18-65 years | 80 years | |
| Axis Max Life Insurance Company Limited | Max Life Smart Total Elite Protection | 1,242 | 18-65 years | 85 years | |
| PNB MetLife India Insurance Company Limited | PNB MetLife Mera Term Plan Plus | 407 | 18-50 years | 80 years | |
| Pramerica Life Insurance Company Limited | Pramerica Life Rock Solid Plan | 30 | 18-65 years | 85 years | |
| SBI Life Insurance Company Limited | SBI eShield Next Plan | 1,676 | 18-65 years | 100 years | |
| Shriram Life Insurance Company Limited | Shriram Life Smart Protection Plan | 109 | 18-65 years | 75 years | |
| Star Union DAI-ICHI Life Insurance Company Limited | SUD Life Protect Shield Plus | 113 | 18-60 years | 80 years | |
| Tata AIA Life Insurance Company Limited | Tata AIA Sampoorna Raksha Promise | 776 | 18-65 years | 100 years |
*Disclaimer: The list of insurers mentioned are arranged according to the alphabetical order of the name of insurance company respectively. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. The list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in
As you can see in the above-mentioned table, that with the increase in age, your premium is also increasing for a term policy. In the ICICI Prudential iProtect Smart term insurance plan, a premium amount of Rs.10,185 is required to be paid by a non-smoker healthy individual of 25 years whereas Rs.11,721 will be paid by a 30 years old individual, indicating that the premiums are lesser at early ages.
These days insurers are offering online services to buy term plan , which is quite convenient than an offline process. Policyholders can easily compare different plans from several different insurance companies based on their features, benefits, premium amount, terms and conditions, sum assured, etc., and make an informed decision. Furthermore, there are many online tools available that can help in buying a term insurance plan such as term insurance calculator, and eligibility calculator. These calculators help you in determining the premium amount based on your chosen preferences such as age, sum assured, income, and lifestyle habits. Thus, you can choose the right term insurance plan in one go.
The sooner you buy term plan, the longer you get the coverage at an affordable premium rate. You can buy a long-term policy for 30 to 40 years and be comfortable, knowing that the financial future of your family remains financially protected and secured by paying a nominal premium to the insurer.
Generally, insurers do not offer term insurance coverage to policy seekers who are aged more than 60 years or who are diagnosed with any critical illnesses such as cancer. Thus, when you buy term plan at a young age and are free of illnesses, you would easily get the insurance at a lower price. In case you wait for a long time, you may get diagnosed with some health problems, increasing your chances to pay high premium rates on the grounds of a pre-existing illness.
In your 20s, your family might not be financially dependent on you. But what if in case, you are the only earning member of your family, you must buy term plan to secure your loved one’s future in case of an unfortunate event like death. In such situations, dependents can use the death benefit for paying their expenses, and debts. Thus, a term plan ensures the protection of your family member even if you are not around.
Term insurance plan comes out with different riders as per your choice to strengthen and enhance the benefits of the plan. Riders can be added to your existing plan by paying a nominal additional premium that provides you more safety against financial crises.
Apart from protecting your family from the uncertainties of life, purchasing a term insurance plan helps you to save a significant amount every year at an early age. It is a great way to save tax. As per section 80(C) of the Income Tax Act, 1961, the premium paid towards the policy is exempt from taxes up to Rs 1.5 lakhs. Thus, investing at an early age, save more money on taxes.
Nowadays, various banks and financial; institutions offer term insurance plans. The term plan premium for each of these policies is determined by various factors. Thus, you should always analyze all the parameters such as income, age, liabilities, debts, plan coverage and expenses before buying a term insurance plan. So, choose your plan wisely and invest at an early age.
Note: Check out the term insurance plan in India and choose one that suits your requirements.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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