Many youngsters today tend to think that insurance is for middle-aged people, and they shouldn’t be concerned about it so early in life. This notion is incorrect on two accounts.
- Insurance is a necessity for people of all age groups. Certain insurance plans such as annuities is useful for those approaching retirement.
- Young people can benefit more from buying insurance early in life.
Benefits of Buying Life Insurance at a Young Age
- Lower Premium
The insurance premium amount can be significantly lower at a young age. On the contrary, buying the same insurance policy at an older age will cost you more money in premium payment.
You are offered insurance at a lower premium at a young age because it is the time when you are supposedly more active and healthier with fewer responsibilities which makes you less vulnerable to life-threatening risks as per standard insurance underwriting parameters.
- Fixed Premium Amount for a Long Term
The premium amount remains fixed for the entire duration of the premium payment term. For instance, if you buy insurance at a young age with a premium payment term of 20 years, you will be paying the same low premium amount for the next 20 years.
Hence, the amount will seem to be more affordable every year as your income increases with time.
Furthermore, the total cost of insurance will be significantly lower for a young person than for an older person due to the difference in premium amount.
- Wealth Generation
By purchasing life insurance early in your life, you give your investments enough time to grow and compound over 20 to 30 years. As a result, you can build a substantial retirement corpus and generate wealth for the next generation by the time you retire.
- Securing Family’s Future
Uncertainties and unpleasant instances can happen anytime without warning. Even if you are unmarried, your parents should not be financially stressed if you are not around.
Therefore, it is always better to secure your family with an insurance plan early in life. Furthermore, it makes you free from tension or unnecessary pondering over the future.
- Tax Benefits
You can also avail various income tax benefits under the old tax regime by investing in an insurance plan.
- Section 80C
Under this section, you can claim a tax deduction of up to Rs 1.5 lakhs for the amount paid toward the insurance premium.
- Section 80D
Under this section, you are allowed to claim deductions up to Rs 25,000 for the premium paid toward health cover.
- Section 10 (10D)
In the event of the death of the policyholder, the entire amount received by the nominee as a death benefit is exempted for taxes.
In a nutshell, life insurance can better suit your long-term financial goals if you buy one while you are still young. Furthermore, it can be a part of your larger goal of retiring early or retiring comfortably in future.