Reasons Why You Must Take a Term Plan By The Time You Are 30

Generally, 30 is seen as the age of adulthood, when one is expected to be able to manage their own affairs with confidence and independence. An average 30-year-old typically has a stable job, a family, and some liabilities, such as loans to purchase a home or a car. This calls for a solid financial plan to account for such liabilities and provide their loved ones with the security they need to weather any financial storms.

A term insurance plan does just that. It provides your family with a sum of money that can help your family approach life's challenges - should the unthinkable happen. Essentially, this money, called sum assured, will provide your family with the financial security they need to continue living their desired lifestyle without having to sacrifice their dreams. Remember, term insurance is a pure risk insurance cover, so you cannot expect any benefits - if you survive the policy duration.

Essentially, the purpose of term insurance is to provide financial security for your dependents or shield them from large liabilities. So, you need to ask yourself - Do you have or do you have visibility of dependents in your life or do you have any loans/liabilities?

If the answer to either of these questions is yes, then buy term insurance as soon as you can. Else, you can postpone your buying decision.

Now, let's discuss why buying term insurance is a good investment to make by the time you’re 30.

Why You Must Take A Term Plan By The Time You Are 30?

Here are a few reasons why buying term insurance till your 30th birthday is a smart move -

1️. To Ensure the Financial Security Of Dependents

By the time you reach your 30s, you will have people who depend on you financially, such as your spouse, children, elderly parents, etc. This means that you are responsible for their needs and dreams. With this responsibility comes the need to have a proper financial plan to ensure a secure future for them even in your absence. Term insurance can help you achieve this. It provides your family with a sum of money that can be used to cover their living expenses, educational needs, outstanding debts, etc. - allowing them to worry less about finances and focus more on their hopes and dreams.

2️. To Lock In Lower Premiums

One of the primary benefits of purchasing a term plan early in life is lower premiums. It is important to note that insurance companies determine premiums based on various factors, including age, health, lifestyle habits, etc. As you age, you become more prone to health issues and illnesses, posing a great risk to insurers. So, they charge more premiums to offset this risk. However, when you are healthy and younger, insurers bear a lower risk - thus charging you lower premiums.

ABSLI Digishield Plan [UIN: 109N108V11] with a sum assured of Rs 1 Crore costs only around Rs. 1081 per month (with taxes) for a 30-year-old non-smoker male who opts for a regular pay option and policy duration of 30 years.

Note: The premium was taken on 04/06/2023.

By taking a term plan before 30, you can take advantage of lower premiums, saving you money in the long run. The earlier you start, the longer you can benefit from these savings.

3️. To Protect Your Family Against Liabilities

You may have various loans and liabilities, such as a home loan, car loan, education loan, business loan, etc. If you pass away before paying them back, your family will need to bear the burden of repayment - leaving them in a financial bind. To ensure that your loved ones are not stuck with such responsibilities, it is essential to purchase term insurance. It gives you the assurance that should the unexpected happen, your family will be financially secure and not saddled with your liabilities.

4️. To Lower Chances Of Application Rejection

As mentioned earlier, as you age, you are more likely to develop lifestyle health conditions - making you a risky individual. In this case, your term life insurance premiums may increase or you may have difficulty obtaining coverage. Therefore, it's important to think ahead and consider investing in a term policy while you are still young and healthy. This way, you can be sure that you have the coverage you need, even if your health changes in the future. Purchasing term insurance early in life reduces the chances of having your application rejected.

5️. To Enjoy Tax Benefits

Term insurance tax benefits¹ are another significant advantage of buying term insurance. Under Section 80C of the Indian Income Tax Act, you can claim a tax deduction of up to Rs 1.5 lakhs per year for the premiums you pay under your policy. Therefore, if you buy a policy before turning 30, you will be able to benefit from tax deductions from an early age, allowing you to get the most value out of your term insurance policy.

Wrapping up!

Investing in term insurance before turning 30 comes with various perks, including lower premiums, lesser chances of policy rejection, etc. Taking advantage of these benefits could be a smart move for young people who want to secure their family's financial future. However, the decision to purchase term insurance requires a lot of consideration since it is a long-term commitment. Consider investing in it only if you have or expect to have financial dependents or loans/liabilities in your life. Otherwise, you can put off this decision until later.

Product Disclaimer

ABSLI Digishield Plan [UIN: 109N108V11] is a non-linked, non-participating individual pure risk premium life term insurance plan.