When you are in your 20s, one of the last things on your mind will be to save for your future. This is when you are young, vibrant, and full of possibilities. However, what most of us do not understand in this age is that planning investments at the start of a career will put us on the right path and ahead of the peers by light-years.
Life insurance policies not only protect you against life’s uncertainties but also to help you with wealth creation over the years. It is why financial experts advise young people to start investing in low-cost term insurance plans and then gradually scale up their investment efforts to include high-risk instruments that offer greater rewards.
Term insurance plans can be easily compared and bought online using an online term insurance calculator offered by almost insurers. The main purpose of buying these plans is to provide you financial protection and cover your future expenses as well as liabilities in case of your untimely demise.
Investing in a life insurance plan at the start of your career will be cost-effective and give you a life cover for a longer period. If you look at it from an insurer’s point of view, they look at young investors as healthy individuals who are less likely to suffer from chronic illnesses. You can toggle your age in a term plan calculator to see the difference in premiums.
Let us discuss the reasons why you must consider investing in a life insurance plan in your 20s and how you can benefit from it.
Protect your family against life’s uncertainties
No one thinks of death and its consequences at a young age, especially when they are on the brink of a career. But life is uncertain, and you do not know what will happen anytime. If you are the sole breadwinner of your family, your untimely death can leave a wide chasm of financial instability. However, buying a term policy at a young age will help take this worry off your hands, thus allowing you to focus on your career.
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The premiums are lower
A young individual investing in a term life insurance policy need to pay a lower premium because they have lower health risk and more working years left ahead of them. It means that you are a low risk to an insurance company who is happy to lower the premium to make the policy more cost-effective for you.
Risk of health emergencies
Even though you may be young and healthy, the hectic lifestyles and poor habits can expose you to the risk of chronic conditions such as hypertension, obesity, and diabetes. You should invest in a term plan early to ensure that you are fully covered against such contingencies, if and when they show up.
The good thing about a term plan is that you can supplement it with riders that allow you to customize the policy. For instance, you can take a critical illness rider that protects you against several illnesses by giving you assured lump sum benefit if you are diagnosed with any of the conditions listed in the policy document. Doing so will allow you to get treatment without worrying about medical expenses.
Check out the term insurance calculator to see how much additional premium you need to pay when you add these riders to your policy. Make sure that the premium is affordable so that you can make regular payments till the end of the term.
Get covered for a longer period
Buying a term insurance policy not only offers you low-cost premiums but also gives you the benefit of a longer cover period. If you buy a term plan at a young age, you would be able to enjoy the policy’s coverage for more number of years. A longer period of cover ensures that you are financially secure at all stages of your life.
Many young investors consider the tax benefits of insurance plans as a long-term advantage for tax savings. The income they earn makes them liable to pay income tax as per the related rules, which they can save by investing in the right type of term insurance plans.
A term insurance policy is a perfect instrument for people at the start of their careers. They are easy to understand and compare online. You can use a term insurance calculator online to check out various policies and understand their benefits before investing.
There is a reason why your 20s is the right time to invest in a life insurance plan. At this age, you need that ultimate financial tool that can protect you in your what-if moments.