Importance of Term Insurance for Young Adults
Every individual that we meet these days is facing some kind of challenge of their own. Be it being emotionally drained or professionally burned out, it all has a significant impact on the human body. Youngsters certainly do not have it easy. From figuring out their career paths in their 20s to being burdened by student loan debts and even planning for making the required savings for their retirements—they have a lot to ponder.
The following are some of the good reasons to have a term insurance in place sooner rather than later:
- Affordable Premium Rates
- Higher Coverage of Medical Policy
- Waiting Period turns into an advantage
- No claim Bonus Accumulation
- Tax Savings for individuals
1.Affordable Premium Rates
- Whenever an insurance company offers the plans to a policy buyer—they assess the level of risk involved. Based on certain factors like age, medical history, type of coverage/diseases covered in the plan, tenure, among others, the companies arrive at a certain level of the premium cost.
- When an individual is young, they are most likely to be at a lower risk of contracting any severe illness or requiring expensive medical treatments. This helps to arrive at a lower level of premium cost as compared to what someone older would have to shell out. This is one of the biggest factors enticing young individuals towards health insurance.
2.Higher Coverage of Medical Policy
- Insurance companies offer several types of plans to young individuals as it is safe to assume that they are healthy.
- It becomes convenient for them to take a lower level of risk and offer a substantial comprehensive plan to them.
- As we age up, the options to select from the best plans reduces as the ailments may tend to increase and become adverse. To reap maximum benefits of wider coverage, starting young is the key.
3.Waiting Period can turn into an advantage
- A waiting period is a fundamental part of an insurance policy. It simply means that in case of certain diseases or say pre-existing diseases, one may have to wait until the quoted period is over to make any claim in that regard.
- Waiting periods differ from disease to disease and are specifically included in the terms and conditions of the policy.
- In case of several severe ailments, the waiting period could range from 1 to 3–4 years; however, during young age, we may not even require that treatment.
- This period could get over and help us to make full use of the policy in the future when we might actually require support in terms of medical costs treatments.
4.No Claim Bonus gets accumulated
- Insurance companies often offer benefits to the policyholders in the years they do not make any claims. Usually, the benefit to renew the policy to a certain per cent higher limit than the current sum assured is provided.
- No claim bonus for all claim-free years is actually quite beneficial. Over a period of time, it gets accumulated and when we look back, we see the significant increase in the sum assured.
- People during younger age are less likely to make frequent claims; hence, they benefit from this.
- There is no corresponding increase in the premium amount.Depending on the insurance provider, a discount of a certain percentage could be offered on the premium cost in a no-claim year.
5.Tax Deductions can be claimed
- Young professionals are often on the lookout for accumulating savings by investing their earnings into tax-saving financial instruments. This idea gets huge support from the Income Tax Act, 1961.
- Under Section 80D of the act, an individual can claim term insurance tax benefits for the premium amount paid for the insurance policy yearly.
- Deductions are given on policies covering self, spouse and children for a premium paid other than cash mode. The provision states that if a taxpayer has made a payment for more than one year in one shot during a given year, a fraction of the payment is done under Section 80D.
- The proper fraction is arrived at by dividing the total premium paid by the number of years of that policy. This is also, however, limited to Rs. 25,000 or Rs. 50,000 based on the case.
Now that you have understood the importance and key driving factors behind insurance covers, you must consider opting for one based on your needs and requirements. Moreover, you can also use the term insurance premium calculator to ascertain the premium amount you need to pay. So, what are you waiting for? Go on and get in touch with insurance provider companies and no longer linger your future safety!