you must buy term insurance by the age of 30
Turning 30 is a major phase in any one’s life. While we may wish that anything uncertain would not happen to us, life throws a lot of surprises. These surprises may be bitter. But to make them less bitter, it is important that you buy a term insurance plan and secure your peace of mind.
Buying a term insurance cover is the right thing, the most responsible thing.
As you become a responsible adult by the time you reach the age of 30. You are healthy, placed with a fantastic career.
5 Reasons to Buy Term Insurance Before You Turn 30
1.) Most-recommended Financial Product
We approach financial advisors to help us invest in mutual funds, SIPs, life insurance policies and pension plans. The idea is to keep our retirement years worry-free and risk-free.
Most financial planners will recommend you to buy a term insurance policy. Their logic is simple:
- Mutual funds and pensions plans can help you save money for your retirement days. You start investing early because you want to have a larger corpus at your disposal.
- But term insurance helps you solve a much bigger risk: risk of death. An unpaid loan, your plan to send the kids to college, financial security for your parents or your spouse. Even if you’re not around, your family will have financial support.
The best part is that term insurance plans cost lower than a lot of other life insurance products. You pay as little as 2 percent of your annual income for a coverage 20 times more than your current annual income.
2.) Starting Early Means Lower Premiums
Before you hit your thriving thirties, you are healthy. The lifestyle diseases like diabetes haven’t started taking a toll on you. Substances like alcohol, smoke, and pesticides in our food haven’t crossed the unhealthy levels.
This means two things:
- The younger you are while buying term insurance, the lower will be your term insurance premium. To put things in perspective, a 30-year-old non-smoker could buy a term insurance cover of Rs. 1 crore for as low as Rs. 552 per month. The same amount of term insurance cover could cost three times more (Rs. 1,400 per month) for a 40-year-old non-smoker.
- While applying for term insurance, one has to undergo a medical check-up. An insurance company could decline to cover you with a term policy because of a lifestyle-related disease. The chances of this rejection is definitely higher as you approach your 40s.
So, healthy and young = cheaper term insurance premium!
3.) Lock Your Premiums Now
When you buy a health insurance policy, your premium increases every year. But with term insurance, you lock the premium amount.
So, buying a term insurance earlier in life implies that you will pay a lower premium for the rest of policy term. It works like this:
Ideally, a term insurance policy should cover you until the age you will have loans and liabilities. Your family may be dependent on you until you are 65. You may have some loans to pay-up till the age of 50. So a person buying term insurance at the age 30 will need a term cover for at least 35 years.
Anything for shorter duration, will not help your family when they might actually need it.
Don’t wait until you celebrate your 40th birthday to buy a term insurance plan.
We all are always on the look-out for number of options to invest and save on income tax.
So, good news! Premium paid toward buying a term insurance can be part of investments under 80C deductions.
Money saved in tax is more money in hand for other important things in life. 🙂
5.) Term plan by your employer is not your best plan
It’s good to work with an employer who care about your family’s future. But to rely only on the term plan offered by your employer, is not the best plan.
At the age of 35, you hit the peak of your career. To switch jobs and explore better career opportunities is always part of our growth.
But, let me tell you that the term plan offered by your employer may not be portable, and will end as soon as you move on.
Rely no one but your best judgement. Buy a term insurance plan when they are the most affordable for you and offer the best risk cover to your family!