4 Reasons Why Term Insurance Should Be a Priority Even If You Are Single

May 07, 2018 | 6 months ago | Read Time: 2 minutes | By iKnowledge Team

As a 25-30-year old in India, most of us do not consider buying a term insurance as we are young and single and often tend to spend a larger portion of our income on luxury or fashion items. So, whether you’re single or the sole income provider of your family including dependent parents or siblings, buying a suitable term insurance policy early on is a crucial financial decision you need to make. Here are four reasons why you should make it a priority:

  1. Term insurance is more affordable when you’re younger

Term insurance policy premiums are determined by a variety of factors, such as age, lifestyle habits and health. When you’re young and active you’re generally in good health but as you grow older, your health might deteriorate, at which stage, if you decide to buy a policy, the premium will be much higher. Term insurance premiums are lower for young, single people and tend to get higher as one gets older. That’s why, investing in a term insurance policy in your late 20s is a good idea.  

  1. Reduces taxable income

Minimizing your taxable income forms the crux of major financial planning decisions because let’s face it — everyone aims to save as much tax as they possibly can. Here’s where a term insurance policy proves to be beneficial. Irrespective of the plan you choose to buy, section 80C of the Income Tax Act,1961 allows you to claim deduction up to a maximum limit of Rs.1.5 lakhs paid towards insurance premium and section 10D of the Act also exempts policy pay outs received from income tax.

  1. Financial risk management tool

A term insurance policy stabilises the effects of the unforeseeable future to a certain degree by helping you plan for it. In the future you might decide to get married and start a family. In times like these, it would be a relief to know you have a term insurance policy to rely on. You can easily amend these policies later with riders or additional life cover to incorporate the growing needs of your family. Term insurance is also an essential tool to cover unseen medical expenses that may arise in your family. Most insurance companies provide certain benefits to your existing policy like accidental death rider and critical illness rider to boost your policy. For instance, with Aegon Life’s iTerm Plus plan’s Life and Health Plus option helps cover 36 critical illnesses.

  1. Security blanket for your loved ones

Buying term insurance policy early in life, when you are single reduces uncertainties in paying off debt too. For instance, assume you have a home loan, to be fully repaid in 10 years; in this case, it would make good sense to buy a term insurance with the same maturity period. So, when your term insurance policy matures, you can use this money to repay your home loan. It also absolves your family or dependents from the financial strain that might fall upon them to clear your debt, if you were to pass away during this time. A term insurance provides you with a protection cover against debt which makes it an advantageous investment to consider.

Conclusion

The future is unpredictable. Buying the ideal term insurance when you are young and single will reduce the impact of any uncertainties that may fall upon you and your loved ones. Moreover, it is a relatively inexpensive financial instrument that provides cover for your life.

Advt. no.: IA/May 2018/3917


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