Never too Early to Buy Life Insurance in your Twenties
Your twenties are some of the most enjoyable years of your life, aren't they? You're young, carefree, and in that prime phase of life between your breezy college years and an inevitable, demanding career. With no major financial responsibilities yet, you may find it easier to spend rather than save.
It's natural to reserve all the big financial decisions like investing and insurance for your thirties. But did you know that your twenties are not really too early to think of these things? In fact, buying life insurance earlier in life can pay off in many ways.
Here's why you need to buy life insurance young.
You lock in a lower premium rate
Every insurance expert will agree that this is perhaps the most attractive benefit of buying a life insurance plan in your twenties. Life insurance service providers generally charge lower rates of premium for younger people because of the smaller amount of risk associated with young policyholders.
When you're in your twenties, you are generally in the prime of health and are less prone to any major illnesses. This means the chances of the insurer having to settle a claim for your policy are also reduced. So, the life insurance provider transfers this benefit to you and charges more affordable premiums if you buy life insurance in your twenties.
With age, your premiums tend to increase accordingly. So, a 25-year old insurance buyer may be charged a lower premium for the same amount of life cover than a 35-year old applicant. Also, for most life insurance policies, the premium amount remains constant throughout the policy term. So, once you lock-in a great premium rate, you can reduce the overall cost of your life cover.
The ABSLI DigiShield Plan, for instance, is a comprehensive term insurance policy that provides a life cover of Rs. 1 crore at just Rs. 477 per month.*
*Scenario: Female policyholder, aged 21 years, buying a level term insurance, with regular premium paying term, and a policy term of 25 years (excl. GST)
You can protect your family from financial difficulties
Your twenties may not come with a lot of financial stress, but you may still have a loan or two to repay. After all, with a fresh paycheck each month, it's easier to convert major purchases into monthly EMIs, thanks to loans and credit facilities that are easily available nowadays. You may also have a student loan that needs to be repaid.
In case of an unfortunate occurrence, these debts may prove to be a major financial burden for your family, particularly if they are dependent on you. Alternatively, even if your family has another earning member, repaying a huge loan in the midst of a loss of income could increase the financial stress they face.
Buying life insurance in your twenties can help avoid all of these problems. It ensures that your family is financially well-protected, so they need not tap into their savings or income to repay any debts in your name. The sum assured offered by life insurance plans can help your loved ones take care of those liabilities without any financial suffering.
You're better prepared for life's future milestones
Getting married, having a child or two, buying your dream home, and saving up for your children's education - all of these are important milestones in life that you may be looking forward to. But these milestones all require adequate financial planning, so you can do justice to them.
Here is where savings plans can be of great help. These are life insurance plans that give you the dual benefit of a life cover as well as savings.The insurer pays out the maturity benefits to the policyholder for surviving the policy term. These benefits can be paid out as a lump sum amount, as periodic payouts, or as a combination of the two, depending on the life insurance plan you choose.
With the payouts from your life insurance plan, you can meet these big milestones in your life as and when they occur. And by buying an appropriate life insurance plan earlier in life, you can be better prepared for these important needs.
The ABSLI Guaranteed Milestone Plan is one such savings plan that helps you meet life's non-negotiable life goals. The ABSLI Vision LifeIncome Plus Plan is another beneficial savings plan that gives you the benefit of periodic payouts, which act as a source of additional income later in life.
You improve the chances of creating wealth
Did you know that life insurance plans can do more than offer financial protection and help you save? Yes, you read that right. There are life insurance policies that also help you invest your money, so you can create wealth over the long term. These plans are Unit-Linked Life Insurance Plans (ULIPs).
Through these ULIPs, you can invest in equity funds, debt funds or even a mix of both, based on your risk profile. They offer market-linked returns in addition to a life cover, thereby helping you create wealth over the long term.
Investing in this type of life insurance plan in your twenties gives you ample time till your retirement comes knocking - a good 30 to 35 years, at least. And over this time, your money has adequate time to grow exponentially. However, if you buy a ULIP much later in life, you may not have as much time left before the plan matures. This could drastically reduce the chances of your investment growing as needed.
If you're in your twenties looking for a ULIP to purchase, the ABSLI Wealth Assure Plus plan may be a good fit. With this plan, you can choose from among 5 investment strategies and 16 different funds to invest in.
You get to save taxes
Irrespective of whether you're in your twenties, thirties, forties or higher, the one thing that remains common across these age brackets is tax. As long as you earn income over the exemption limit, you will have to pay income tax1. Now, in your twenties, you may be up for one promotion after the other. And these often come with pay hikes.
After a certain point, you may find yourself pushed into a higher tax bracket. Buying life insurance can help you reduce the burden of high taxes. Of course, this is not the main reason to buy a life cover. But it sure is a nice added advantage to have, isn't it?
The premiums that you pay for your life insurance policy can be deducted from your total taxable income, according to section 80C of the Income Tax Act, 1961. This effectively reduces your taxable income and therefore, lowers your taxes.
So, that sums up the many reasons why your twenties may be the right time to buy a life insurance plan. Today, with the evolution of digital insurance solutions, you can compare the many different life insurance plans available online, and complete your purchase from the comfort of your home itself. And if you haven't yet purchased a life cover, you now have not just one, but five good reasons to take that leap and secure your future, and your family's.
1Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
ABSLI Vision Life Income Plus Plan (UIN: 109N131V01) is a non-linked participating individual life insurance savings plan.
ABSLI DigiShield Plan (UIN 109N108V06) is a non-linked non-participating individual pure risk premium life insurance plan; upon Policyholder's selection of Plan Option 9 (Level Cover with Survival Benefit) and Plan Option 10 (Return of Premium [ROP]) this product shall be a non-linked non-participating individual life savings insurance plan.
ABSLI Wealth Assure Plus (UIN: 109L120V02) is a non-participating unit linked life insurance plan.
ABSLI Guaranteed Milestone Plan (UIN: 109N106V10) is a non-participating traditional insurance plan.
ABSLI Life Shield Plan
A term insurance plan that offers you the flexibility of plan options suitable for your family's non- negotiable goals and ensure they need not compromise on their lifestyle. UIN: 109N109V05
- Choice of 8 plan options
- Cover your spouse under the same policy
- Longer Life cover till age 85
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