- Age is one of the most important factors for premium calculation and the premium amount increases with age
- Buying insurance early will help take care of any current or future loans and liabilities in case you are not there
- As term insurance premiums are exempt from tax under Section 80C, the earlier you buy insurance, more tax you save
As a young individual, you are full of optimism, energy, and hope. It is the time when you’re setting course for a successful professional and personal life. You have probably landed your first job and have only a few responsibilities to shoulder. At this stage, life seems carefree and you are looking forward to its various milestones. Getting a life insurance might not be among one of your priorities.
Yet, here are a few solid reasons you should think differently. Getting life insurance is a wise decision that might be the first of many important moves that will chart your financial future:
If you start early, the premium you pay will be lower
Normally, a person in his/her early 20s is fit and healthy. That is why age is the most important factor for premium calculation, and the amount payable increases with age. Getting a term insurance plan around this stage in life will help you pay lesser premium. And, since term insurance premium amounts usually remain the same through the policy term, starting early is more beneficial. The below example can help you understand this concept better:
| Your Age |
Policy Term |
Life Insurance Cover |
Annual Premium* |
| 25 |
30 Years |
50 Lacs |
4,000 |
| 35 |
30 Years |
50 Lacs |
6,700 |
*Disclaimer: For a non-smoker, male having no premedical condition, buying Exide Life Insurance Elite Term Plan (online mode). The premium mentioned is excluding GST and rounded to nearest hundred.
As seen from the above table, if you delay getting life insurance by just 10 years, the premium will rise by more than 50% for the same sum assured. Moreover, you will end up paying this higher amount for the entire policy term.
A term insurance can help take care of current or future loans and liabilities in your absence
When you start earning, you may want to fulfill your long awaited dreams, many times making you go beyond your budget. For example, 25-year-old Rahul has recently started earning and began paying off his education loan. Alongside, he saves some money for down payment of a car. He buys a car using the saved money as down payment and the rest 85% with the help of a car loan. Now, in addition to the EMIs for the education loan, he will have to pay the car loan EMIs for the next five years.
This is great. However, in case misfortune befalls and he is no longer there, his family will have to deal with the extra financial burden of the loans. However, this wouldn’t have been the case if Rahul had taken a term insurance along with the loan. Had he taken a term plan, the sum assured would have covered the loans and any other financial liabilities like credit card debt, and other borrowings.
While you may not have any current liabilities when you opt for a term insurance, the sum assured can help take care of any loans and liabilities that may come on you in due course of life.
Term insurance premiums are exempt from tax under Section 80C
As a person starts earning, tax saving becomes important. In addition, as his/her income increase during his career, his tax liability will increase too. Here too, term insurance is beneficial. The premiums (up to ₹ 150,000 p.a.) paid towards a term insurance policy are eligible for tax benefits under Section 80C.
In addition, even the payout that the insured’s family receives is tax-free under Section 10 (10D) of the Income Tax Act. Thus, a term policy can serve the dual purpose of a pure protection tool as well as a tax saving instrument
Exide Life Insurance offers affordable term plans that help you get started on the route to securing your family's future. Visit our website to find out more.
