What are your top priorities when you are in your mid-twenties? A job, higher education, some leisure holidays, and more. But never does the thought of investments cross your mind. Making the right financial investments is crucial in shaping your future for retirement.
India’s demographics have a third of its population as millennials, who contribute to almost half the workforce in this country. These millennials live their lives on the internet, and the internet is where it all begins. The digital revolution in the nation has made it even more conducive to living on the internet. It involves everything from buying houses to investing your hard-earned money. This is why getting an insurance plan is important while juggling your other financial goals.
With many different insurance policies, which is the perfect plan?
The individual’s needs determine the answer to this question, but most millennials prefer to buy term insurance plans.
What is term insurance?
Term insurance is an insurance policy that covers you for a specified policy duration. It can differ among the various plans offered. Your insurance plan provides death benefits to the nominees, and there are no maturity benefits. These term plans provide a safety net for your dependents.
Here are some term insurance benefits that every millennial must not miss –
A person’s age plays a significant role in determining the premiums to be charged. At young ages, there are fewer chances of suffering an ailment than almost none. This is why a millennial in 2020 can buy term insurance much cheaper than his older counterparts. I purchased it later in life; the same-term insurance plan might prove expensive regarding premiums for a similar insurance coverage amount. It is simple: the earlier you buy, the cheaper it is.
Tax benefits
Millennials can save a handful of their taxes by getting term insurance coverage. A policyholder can avail of deductions up to ₹ 1,50,000 under section 80C on payment of a term insurance premium. Moreover, term insurance’s maturity benefits with premiums return are exempt under section 10(10)(D). These deductions/exemptions are stated in the Income Tax Act of 1961.
Income replacement
Life insurance is seen in its purest form in a term insurance plan. It purely works on the concept of ‘indemnification for loss.’ It provides financial security to the dependents in the absence of the policyholder. Hence, with the policyholder’s unfortunate demise, your dependents have some financial backing. Your nominees can accomplish their life goals in your absence.
Peace of mind
Every policyholder gets insurance coverage with the sole objective of their family’s well-being. Every person strives hard to fulfill their family’s dreams when they are alive but wants the bare minimum of financial protection in their absence. A term insurance plan offers adequate cover to your family in your absence, keeping you at peace of mind.
Add-On Benefits
Apart from death benefits, you can customize your term insurance plan to offer more comprehensive coverage by offering add-ons. These add-ons or riders are available for a marginal premium. Some important add-ons that should not be ignored are accidental disability add-ons, critical illness add-ons, and the premium add-ons waiver.
Understanding term insurance and its benefits is crucial in making the right choice for every millennial. Start early and select the best term plan after comparing it among insurance companies.
