India is a land of millennials, as they comprise around 34% of the country’s population, which is approximately 440 million. It is noticed that a majority of millennials spend their income on lifestyle-related requirements rather than saving it. Additionally, many feel that there is no use of buying an insurance policy now, as there are hardly any dependents, such as spouse and children, and financial obligations like loans, on their shoulders.
The younger generation needs to understand the various advantages of buying an insurance plan at an early age. However, it is essential for millennials to ascertain the right insurance policy for them. Out of the different insurance products available in the market, a term insurance plan is gaining immense popularity today. If you are wondering about the term insurance meaning, let us explain it to you in a simple way.
Term insurance is a pure life insurance plan that ensures the financial stability of your family members in case of a tragic incident, which leads to your absence during the policy tenure. Here, the insurance company provides the sum assured to your nominees if something untoward happens to you while the policy is active. A term plan offers a high sum assured at an economical premium. This ensures that your loved ones live a financially independent life and fulfill all their aspirations even when you are not there to take care of their requirements.
Now when you have got an idea of this policy, let us explain the various term insurance benefits of buying it at a younger age.
- Lower premium
A core plus point of investing in a term plan at an early phase of life is that the premium is quite reasonable. This is because the risk of mortality is low for younger people as compared to older policyholders. The premium of the term plan stays stagnant throughout the policy duration. So, with this term insurance benefit, you can save a significant sum on premiums.
- Lesser chances of rejection
When you grow old, there is a high probability of having life-threatening diseases like high blood pressure, diabetes, and cardiovascular problems, among others. If you are suffering from any such issues, insurers may either deny your term insurance application or charge you a higher premium. So, before you become old and develop such medical conditions, it is advisable to buy an ideal term insurance plan while you are healthy.
- Tax benefits
Apart from securing the monetary well-being of your loved ones, a term plan offers tax exemptions. Here, you can claim a deduction for the premium paid towards your policy as per Section 80C of the Income Tax Act, 1961. Here, the maximum permissible value is INR 1.5 lakh per year. Besides this, the sum assured that your nominees get in your untimely absence is tax-free according to Section 10(10D) of the Act.
Term plans offer riders that can help you widen the scope of your existing policy. Based on your needs, you can purchase riders like accidental benefit rider, waiver of premium rider, income benefit rider, and critical illness rider. You will have to pay a bit extra over and above the basic premium to avail of these riders; however, they are worth it. Additionally, you can get these at a nominal price when you add them to your existing online term policy at a younger age. This is because the insurer may consider your health condition and age before issuing any rider. Do note that riders may be costlier at an older age.
Buying a term plan at an early age will help you inculcate the habit of savings. So, it is recommended that instead of spending your money on materialistic items, invest in an online term policy to ensure the economic security of your family members.