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 crosses 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. They contribute to almost half the workforce in this country. These millennials have their lives on the internet, and the internet is the place where it all begins. The digital revolution in the nation has made it even more conducive to live 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 a plethora of different insurance policies to choose from, which is the perfect plan?
The needs of the individual 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 offers death benefits to the nominees, and there are no maturity benefits. These term plans offer a safety net to your dependents.
Here are some term insurance benefits that must not be missed by every millennial –
A person’s age has a great role in determining the premiums to be charged. At young ages, the chances of suffering an ailment are less to almost none. This is why a millennial in 2020 can buy term insurance way cheaper than his older counterparts. I bought at a later stage in life; the same term insurance plan might prove expensive in terms of premiums for a similar insurance coverage amount. It is simple, the earlier you buy, the cheaper it is.
Millennials can also save a handful of their taxes by getting term insurance cover. A policyholder can avail 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, 1961.
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 unfortunate demise of the policyholder, your dependents have some financial backing. Your nominees can accomplish their life goals in your absence.
Peace of mind
Every policyholder gets an insurance cover with the sole objective of well being of their families. Every person strives hard to fulfill their family’s dreams when they are alive but wants bare minimum financial protection in their absence. A term insurance plan offers adequate cover to your family in your absence, keeping you at peace of mind.
Apart from death benefits, you can customize your term insurance plan to offer more comprehensive coverage by offering add-ons. These add-on or riders are available for a marginal premium. Some important add-ons that should not be ignored are accidental disability add-on, critical illness add-on, and the premium add-on’s waiver.
Understanding what term insurance and its benefits are crucial in making the right choice for every millennial. Make sure you start early and select the best term plan after comparing among different insurance companies.