Term Insurance For Millennials - A Complete Guide

Millennials are the movers and shakers of today’s world who were born amidst the tech boom - the early 1980s till the mid-1990s. These trailblazers are taking the world by storm, shaping the future as they dive into careers, start families, and tackle financial responsibilities head-on.

As they venture into their exciting journeys, there is a crucial aspect they must prioritise - the financial well-being of their loved ones. After all, no one knows what lies ahead; therefore, as a millennial, you must equip yourself for the uncertainties down the lane. Now, how would you ensure that your family will be well taken care of in case something unfortunate happens to you? Enter the superhero of financial protection - term insurance! It is like having a shield against the unknown, always by your side.

But the sad part is that, despite all these resources and increased awareness about financial planning and term insurance, our country still has one of the lowest insurance penetrations in the world, comprising only less than 5% of the GDP1. This highlights the need to prioritise the importance of insurance and financial planning for a secure future.

In this article, we will explore why a term insurance policy is an absolute game-changer for millennials and the foundation of their smart financial planning.

What Is Term Insurance?

Term insurance is like a reliable seat belt that protects your loved ones should something unfortunate happen to you during the policy term. It provides them with a sum of money, known as the sum assured, that helps in replacing your income and fulfilling the long-term and short-term financial needs of your family, such as day-to-day expenses, rent, children’s education/wedding, healthcare expenses, etc. They will receive this amount as per the payout option you choose while buying the policy.

And, term insurance is a pure risk cover, which means that if you outlive the policy term, you will not be entitled to receive any benefits.

Why Should Millennials Buy Term Insurance?

Here’s a list of benefits you, as a millennial, can enjoy by purchasing a term insurance plan -

1. Financial Protection

If you are at a point in life where you are building your family or supporting loved ones who depend on you, investing in term insurance for older adults will ensure that they will be financially protected if something unfortunate happens to you during the policy period.

As mentioned above, they will receive a sum assured, known as a death benefit, in the event of your passing away. This money can be a lifeline for them, helping them maintain their lifestyle and handle their finances without any burden.

And, the next big concern for many young folks is loans. While you may not have huge loans perhaps like home loans, education loans are a common reality. But fear not! The sum assured from term insurance can be used to pay off any outstanding loans. This means your family won't have to worry about paying off these financial debts on top of dealing with the emotional loss.

2. Affordable Premium

When it comes to buy term plans and life insurance plans, insurer's offer budget-friendly premiums. They can provide substantial coverage for your family without breaking the bank. The reason they are so affordable is that they don't include any investment features. Meaning, unlike other types of insurance, these plans don't pay any maturity or survival benefits - unless you have opted for a plan with such features.

3. Lock The Low Premium Amount

Your age and health conditions influence the cost of premiums of your term insurance plan. You can take advantage of lower premiums by purchasing term insurance at a younger age. This is because when you are young, you are in all likelyhood healthier and less likely to have serious health issues, which means the risk of something adverse happening to you is lower. But, as you age, the cost of term insurance tends to rise because the probability of health problems or other risks increases.

4. Easy To Buy

The rise of online platforms has made buying term insurance a breeze. Gone are the days of visiting offices or dealing with complicated paperwork. With just a few clicks, you can effortlessly research and compare different policies, get quotes, and complete the application process right from your computer or smartphone. This simplified process not only saves you time but also fits perfectly into your busy schedule.

5. Customisable Coverage

Term life insurance for adults lets you personalise your plans according to your unique needs and circumstances. This means you can customise the coverage amount and policy term as per your family’s needs. You can even add riders for extra protection.

As you go through various life events like getting married, buying a home, or starting a family, your financial responsibilities change. And, term insurance caters to these changes in your life by enabling you to customize the coverage exactly as per your and your family’s specific requirements.

6. Tax Benefits^$

You can also leverage the tax benefitss^$ that come with term insurance while securing your family’s financial well-being -

• The premiums you pay for your policy are eligible for tax deductions up to Rs 1.5 lakhs under Section 80C of the Income Tax Act.

• Moreover, the death benefit your family will receive from the policy (if you pass away during the policy tenure) will also be exempt from taxation under Section 10(10D)^{^} of the Act.

When Should Millennials Purchase Term Insurance?

It might sound unrealistic for young and healthy individuals to think about a future without them. However, it is important to consider the impact of your absence on your dependents, especially if you are the sole breadwinner. Thus, you must cultivate insurance awareness to understand the significance of term insurance policies in safeguarding your family from uncertainties.

So, you need to invest in term insurance if -

• You have dependents, such as children, a spouse, or retired parents, who rely on you.
• You have not accumulated enough savings to meet your family's current and future financial needs.
• You carry a significant loan that could burden your family in the event of your demise.
• You have major unfinished responsibilities, like funding your children's education or weddings. (how is this relevant for millennials)

Conclusion

Term life insurance for young adults offers vital financial security and peace of mind. It builds a future where your loved ones are financially protected whether or not you re around. What’s more, you can enjoy low premiums due to your youth and good health and can also choose the coverage duration to suit your family’s needs. So, stay proactive, protect your dreams and safeguard your loved one’s tomorrow with term insurance - the ultimate millennial power-packed move!

Source

^[1] https://cafemutual.com/news/insurance/28335-insurance-penetration-is-just-42-much-less-than-the-global-average-of-7