In India, we have a significant number of working young adults that account for millennials. In the 20s, many people are reluctant to invest in an insurance plan as they have minimal to no financial burden. Moreover, millennials would instead invest that amount in starting their venture or the stock market.
Despite the 20s being the prime time of your life both in terms of health and finances, securing your financial future is a must. You are bound to get married and start your own family. At that time, your priorities will change, and the financial security of your loved ones will be a rising concern.
Therefore, it is wise to start investing in an insurance plan that secures your family’s financial future (parents, spouse and children), even before starting a family. And a term insurance plan allows you to do just that. Besides a secure financial future, millennials should invest in term insurance for the following reasons –
- The policy is cost-effective
It is well known that term insurance is the most affordable life insurance product available in the market. However, the age of the applicant plays a determining role when calculating the term insurance premiums. As mentioned earlier, the 20s is the prime time of your life as you are less likely to suffer from any life-threatening disease.
During this time, buying term insurance is very cost-effective. You can get a high term insurance coverage at a nominal premium price. Further, you can use the term insurance calculator to determine the premium charged on your desired coverage and add-on benefits.
- The policy offers financial security to your loved ones
Financial security of the family in your absence is the primary objective of term insurance plans. We understand that you may not have a family of your own, but you do have your parents. If anything were to happen to you, the policy would pay a lump sum benefit to your parents. The amount can be used by them as and when needed.
- The policy improves financial credibility
Insurance, in general, helps in improving the credit score. So, if you were to apply for any loan in the future, investing in term insurance will help you build a healthy credit score. That way, the policy you purchased in your 20s leverages for loan applications and gets you the best deals in the market.
- The policy offers tax benefits
Millennials can avail several tax benefits when investing in term insurance. The premiums paid towards the policy can be claimed for tax deductions under Section 80C of the old income tax regime. Moreover, the death benefit received on the plan is tax-free under Section 10(10D). If you have purchased the critical illness cover on your term insurance plan, you can claim additional tax deductions under Section 80D of the Income Tax Act, 1961.
Based on the pointers discussed above, it is quite evident that term insurance is a fruitful financial investment tool for millennials. They can secure a higher sum assured at a nominal premium price.
FinancesGlad is India’s fastest growing online publication Blog for Entrepreneurs, Small business, Bloggers and personal finance experts.