You have recently become a working professional and getting your first salary is a joyous feeling. You must have so many plans and things to do with the salary. You should definitely fulfil those wishes with this amount. But before anything else, keep aside a portion of your first salary to invest in a term plan.
But why would you need to invest in an insurance plan so early? Why not do it later in life?
Read more to know the reasons why buying a term insurance plan is one of the best things you can do with your salary.
Better cover and lower premium
The best thing about buying a term plan early on in life is the cost benefits. You’ll have to pay a reasonable amount to get significant life insurance coverage. This is because of the fact that you still have good health, young age, and limited liabilities. What’s even better is that you’ll have to pay this same low premium all through the term.
The tax benefits
Since you have begun earning now, you’ll have to start thinking about tax payments. This is probably the time when you’ll be filing the taxes for the first time. When you pay some of the income as the premium in term plans, your tax liabilities are reduced. As per Section 80C of the Income Tax Act, you can avail tax benefits of up to INR 1.5 lakhs from the taxable income.
Safeguarding the future
When you become the earning member of a family, responsibilities start coming along, regardless of whether you’re married or not. When you’re married, you have your spouse and kids to look after. If you are single, then you must take care of the aged and retired parents.
You get to plan the future accordingly by purchasing a term plan. In the untimely death of a policyholder, the family receives financial support from the policy to deal with all financial hardships.
Learning financial discipline
It’s always wise to inculcate a good habit, particularly when it comes to finances. The sooner you start, the earlier you can achieve financial independence. You can start taking the first steps by buying a suitable term plan with the first salary. When you start early, you can remain insured for a longer time.
Cost effectiveness of early insurance
A term plan is the most cost-effective and easiest plan that a person can buy. Ideally, it doesn’t combine investment and insurance, which makes it the best way to protect a family in case of the primary bread earner’s untimely demise. Since it isn’t similar to ULIP or endowment plans, a term insurance policy is easy to understand. A person just needs to pay a periodic premium to get a life cover.
So, it’s time now to sit down and look at all the viable term plans in the market. Choose the one that suits your needs and fits your budget.