Finance

Here’s Why You Should Invest In The Best Term Insurance Early In Life

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One of the most fundamental necessities for a person today is to build their finances in a way that sustains them not only in the present but also in the future. A term life insurance policy is one of the ways to achieve that security, where a person is able to ensure the protection of those dependent on them; by choosing to insure themselves in the event of their death or illness. 

A term life insurance policy is made to effectively cover the needs of the insured and their dependents through a sum assured or death benefit in the event of the policyholder’s demise. The best term insurance plan in India is considered to be one of the most affordable means of securing one’s future where premiums are low and one can customise their coverage, add riders and choose pay-out patterns according to their needs. 

We are sure you want to know what the sum assured meaning is. Well, the sum assured is the amount that is paid out to the beneficiaries as denoted by the policyholder at the time of the term life insurance policy being purchased. It is an assured sum that is handed over to the beneficiaries of the policy at the time of the insured person’s passing. This pay-out can be customised into a staggered monthly income instead of a lump sum if deemed fit for the beneficiaries

Since the central goal of the best term insurance plan is to ensure a person’s life, it eases financial stress on their dependents or beneficiaries, where they are able to navigate their absence financially; especially if they were the primary income earner. One can expect to receive the sum assured over nominal premiums costs, which can help the beneficiaries to meet their expenses, pay off any outstanding debts or even fulfil educational expenses without compromising on their goals. 

When buying the best term insurance plan, one should be aware of the incentives and perks that can be accessed if they invest at a young age. To start one’s investment journey at a time when they are in their mid-to-late twenties can be a vital financial decision as an early start towards a secure future can aid in financial planning and achieving future goals in a seamless manner. Let us look at how investing in the best term insurance at a young age can benefit the policyholder:

1. Low Premiums: There is a range of insurance plans that offer coverage and future benefits to policyholders of all kinds. However, the more complex a plan is, the higher the premiums for them are. Hence, for those who are starting out with limited financial agency and insurance knowledge can choose to go for a term insurance plan as their first investment. 

It is a simple instrument that has premiums that can go as low as Rs 600 a month, and are accessible to people from all income brackets.

2. Lower Risk and Vulnerability: Investments and insurance plans targeted towards wealth accumulation are interdependent on one another as they help build each other. The money sent into these instruments is focussed on growing in value over time, and also allowing the insured person to fulfil their goals. 

To be able to build a corpus and have a strong investment portfolio, one needs to be secure about things such as their life insurance expenses. The reason for that, is that in the due course of earning their capital in high-return schemes, one may experience financial losses in the market; hence when a person is insured under a term insurance plan their losses will not affect their coverage or tenure. 

While investing in market-linked schemes and money instruments, one will not have to compromise on their life insurance requirements as they are increasingly affordable and customisable as per the customer’s needs.

3. Tax Benefits: Since lawmakers understand the universality of needing to secure one’s future in the face of unforeseen emergencies; the premiums paid for a term insurance plan and the payout sum thus received from the same at the time of maturity is exempted from taxation under Section 80C and 10(10D) of the Income Tax Act, 1961.

Term life insurance plans are therefore an ideal choice of insurance and investment where the taxpayer can avail a tax deduction of up to Rs. 1, 50,000 from their net taxable income on account of the investment premiums they may have paid. 

It is a misconception that one only requires term life insurance policy when they are well past their younger years and only once they have dependents such as a spouse or children. 

A detriment of buying term plan insurance at an older age is the high cost of premiums, as a person is most likely to have illnesses or ailments at this age rather than at a young age. Buying the best term insurance plan in one’s mid-twenties is the ideal decision, as the cost of premiums is significantly less and one can alter their terms of coverage once they have major life developments such as a marriage or a child. 

Therefore, equipped with the best term insurance at hand and a strong insurance profile strengthened at a young age; a person can avail all the benefits of secure finances and a worry-free future. 

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