India is full of well-educated, young professionals who understand the importance of financial independence. Yet, many of them believe that buying a term insurance plan can wait until they reach a certain age. As per a recent survey conducted by KANTAR IMRB, only 45% of the respondents aged 25 to 35 years have heard of term plans and barely 17% have bought such policies. Considering how unpredictable life is, this data is both puzzling and worrisome.
As we grow older, our responsibilities also grow. We realise that we have to take care of not just ourselves, but also the people who are closest to us. Buying a term plan takes a lot of burden off your shoulders and empowers you to live a stress-free life. Whether it's your child's higher education or your parents' medical bills, a good term insurance plan will take care of it all in times of need. However, like every decision in life, the decision of buying a term insurance plan must also be taken at the right time. And that time is now.
Read on to know why you must buy term insurance plan at a young age.
1. Lower premium
As you grow older, you are at a higher risk of developing health-related complications. Therefore, if you decide to buy a term insurance plan while you are young, insurance companies will offer you a plan with a lower premium. On the other hand, if you apply for a term insurance plan at a later stage in life, the premium will be higher. In other words, the younger you are, the lower is the premium amount.
2. Tax benefits
A term insurance plan also helps you save tax by offering tax benefits under Section 80C and section 10(10D) of the Income Tax Act 1961. As per section 80C, the premium that you pay for your term insurance plan can be deducted from your total income. This brings down your taxable income, thereby also reducing your tax liability. You can claim up to Rs. 1,50,000 of your insurance premium as a deduction under this section.
Under section 10(10D) of the Income Tax act, 1961, the benefits obtained from a term insurance plan are also exempt from tax, provided the sum assured is at least 10 times the annual premium paid. The above mentioned tax benefits are subject to provisions of Income Tax Act, 1961, as amended from time to time.
3. Reduced dependence on employer's term insurance
While it's great to have an employer term insurance policy, it isn't wise to rely on it entirely. As you grow in your career, you switch between jobs and every time you do that, your insurance policy with your current employer gets terminated. Moreover, there is no guarantee that your next employer will offer a decent insurance cover.
4. Lower rejection rate
If you have a pre-existing illness, there are chances of your term insurance application being rejected. This is because you are perceived more risky according to insurance underwriting practices. However, when you are young, free of any illness and in the prime of your life, your application can be approved without any hassle.
5. Stress-free life
To be able to enjoy life to its fullest is the biggest upside of buying a term insurance plan at the right age. Life keeps on changing and a good term insurance plan lets you increase or reduce your insurance cover as per your requirement, subject to provisions stated in the term plan, making sure that you are insured for every eventuality. For example: Once your children become independent, you have the option of reducing your insurance cover and the premium associated with it.
If you think you are too young to buy a term insurance plan, think again. In a world full of uncertainties, buying it at a young age might just be the best financial decision of your life.
However, the question remains: How to do it in the best way possible?
The solution of your term insurance woes
The best way to get rid of your term insurance worries is to choose the right insurance company. Once you do that, half of your worries would be over. Choose a company that stresses on easy procedures and efficient management. The presence of online procedures is another feature to look for in an insurance company. For instance, if you wish to buy a term insurance plan from Bajaj Allianz Life, you can do that in three easy steps.
1. Log on to the website
2. Determine your requirement by using Bajaj Allianz Life Term Insurance Calculator
3. Choose your plan as per the requirement, offline or online
You can even fill in your details and have an executive call you, who can guide you through the process.
It is important to know the claim settlement ratio as well. This ratio establishes whether an insurance company is worth trusting with a cover on your life. For example: Bajaj Allianz Life Insurance recorded a claim settlement ratio of 98.02%  in FY 2019-2020 and has a claim settlement ratio of over 90% in the last five years.
One cannot stress enough on the importance of term insurance. Life is unpredictable. You cannot control it but you can surely plan it. Buy term insurance young so that you can retire old, comfortably.
 Individual Claims Settlement Ratio for FY 2019-2020