Your 20s are the time when you start balancing your career and slowly understand the responsibilities you have and will take on in the future. In your 20s, you start earning and can establish your career. As you start becoming financially independent, you should start paying attention to your liabilities and future financial goals.
One of the biggest decisions you can make is to opt for a good insurance policy so that you are ready for financial needs that arise in the future.
Choosing a term insurance plan in your 20s is a good move. With this decision, you provide insurance coverage to your family even after your passing.
What is Term Insurance?
Term insurance is a type of life insurance that provides coverage for a specified period of time. It is usually the most affordable type of life cover and offers protection against the financial impact of accidents and unfortunate events.
As the policyholder, you pay a premium to the insurance company, and if you pass away while the policy is in force, the insurer can pay a death benefit to the beneficiaries you have chosen. The death benefit is usually tax-free and can be used to cover expenses such as funeral expenses, outstanding loans, and more.
Top 6 Reasons to Opt for a Term Insurance Plan in Your 20s
There are many reasons why you should choose a term insurance plan from the beginning of your financial career. Read on to find the top 6 reasons:
1. Early Investment
These days, buying a term insurance plan and getting term insurance benefits is very easy. The process requires minimal paperwork, and insurance agents help you complete the process. In fact, you can buy an insurance policy online too.
By purchasing term insurance early, you can control the premium and the duration of the insurance policy. You can protect your family against any financial liability for a long time. You can even add personal accident coverage and other benefits under one comprehensive term insurance plan.
2. Future Planning
A term insurance plan, with its affordable premium payments, can be a wise first step in your investment journey. When you opt for one of these plans in your 20s, you get ample time to plan for the future. You can look at investing in other financial instruments such as mutual funds, stocks, or real estate, as the amount you save on the term insurance premiums can be invested elsewhere.
3. Secure your Future Against Untoward Events
You cannot ignore the unpredictability of life. Many believe that investing in a term insurance plan is a very optimistic and practical approach to life. A good term insurance cover purchased in your 20s can protect your family and your assets in case of any untoward event like a deadly accident, terminal disease or sudden death.
It is best to stay prepared from a young age and plan ahead of time so that your loved ones do not face any problems even when you are not there to care for them.
4. Minimal Chances of Rejection
When you apply for a term insurance policy, the insurance provider could reject your application on certain grounds. The risk of policy rejection is not very high for working professionals in their 20s. If you have a stable income source in your 20s, you can definitely start investing in a good term insurance plan.
When you take a term insurance plan at a young age, insurance providers accept it easily because of the following reasons:
- You have an active life and are usually free from illness in your 20s, so the risks are not high.
- You have a stable income and an active career graph, which means a stable long-term investment in a term insurance policy is both possible and advised.
If you want a smooth application and acceptance process, go for a term insurance policy in your early 20s.
5. Enhance your Coverage
When looking for an insurance plan, the many options available on the market can be confusing. As a solution, you can opt to take one term insurance plan that protects you from all angles. This is possible with a complete term insurance plan that has additional riders that cover critical illnesses, accidents, and more to enhance your coverage.
You can customise your term insurance benefits according to your specific risk factors so that a large chunk of your future expenses can be covered.
6. Enjoy Tax Benefits
Apart from the protection you get for your family, a term insurance policy also helps you claim tax deductions for the premiums paid under Section 80C of the Income Tax Act. This is because according to the law, the premium amount you deposit towards the insurance policy is exempt from tax provisions.
People should start investing in financial instruments like insurance policies from a young age. As soon as you start earning a stable income in your 20s, research insurance plans and choose the term insurance plan that suits your financial goals. Staying ahead financially will help you live your life worry-free in the later years.