When Is the Right Time to Buy Term Insurance?

While considering financial planning, people think about investing in financial products, such as stocks, bonds, and mutual funds. However, they also need to understand the importance of life insurance.

Investing in life insurance should be your topmost priority. Such a policy can help you in safeguarding your family’s financial future. However, with different life insurance plans offered by insurers, you may be confused about where to invest. A term insurance plan is an ideal alternative, as it offers a high sum assured at a nominal premium.

Term Insurance

In a term plan, the premium remains stagnant throughout the policy period. The premium is significantly cheaper when you are young. It keeps on increasing with age. So, it is advisable to invest in an online term insurance plan right from an early age.

If you are eager to know when it is suitable to invest in a term plan, then do note that there is no specific time to do so. The term insurance age limit is between 18-65. However, you need to invest in it during an early phase of life to reap its benefits.

Advantages of investing in a term plan at an early age

1. Lower premium

The premium is significantly low when you invest at an early age. When you are young and healthy, there is minimal probability of acquiring life-threatening diseases. Therefore, the chances of mortality are low. So, the premium is cheaper when you invest at an early age.

2. Premiums are constant

The premium of a term plan remains the same throughout the policy tenure. When you buy term plans at an early age, you can get them at cost-effective rates and save a significant sum over the years.

3. Tax exemptions

Term plans offer tax benefits under Sections 80C, 80D, and 10 (10D) of the Income Tax Act, 1961. You can claim a deduction on the premium paid for your policy under Section 80C. Here, the maximum permissible limit is capped at INR 1.5 lakh per annum. You can claim an exemption under Section 80D if you have purchased health-related riders with your term plan. Moreover, the sum assured received by your nominee is tax-free under Section 10 (10D).

4. Rate of rejection is low

When you apply for an online term insurance policy, your age, medical conditions, and lifestyle habits play a crucial role in influencing its premium. The rate of rejection while purchasing a term policy is low when you buy it early. It is because when you are young, you do not have any medical history. So, there is little to no risk of an untoward incident occurring. Therefore, the insurer will approve your term policy application without any hesitation.

5. Riders

You can purchase different riders, such as critical illness, accidental death benefit, accidental disability, and waiver of premium rider, among others. Such riders can help you widen the coverage of the policy. You will have to pay additional premiums to avail of riders. However, riders can prove useful in challenging life situations.

For instance, if you have a critical illness rider, you will receive a lump sum amount from the insurer if you are diagnosed with medical conditions as pre-defined by the term plan. Such an amount can be beneficial, as you can use it to pay for medical treatment, doctor’s visits, and household expenses, among other costs.

As you may have understood the importance of investing in an online term insurance plan at a young age, you must do it without any delay. A term plan is the foundation stone of any successful financial portfolio. So, before investing in other financial products like stocks and mutual funds, buy a term plan and shield your family’s future.