Benefit of taking term policy in early age

There are multiple benefits of taking an insurance policy at an early age, especially term insurance. We all know risk on life increases with age and so does insurance premium. As you age, you are at greater risk of contracting critical illnesses such as diabetes, cancer, etc., as well as lifestyle diseases caused due to the sedentary habits that accompany the 9-5 work day. So if you take policy at a later stage in your life, insurers may reject your policy or simply increase your premiums by a process called "loading", on the grounds of your "pre-existing medical condition".

Also, your family needs your financial protection as long as you contribute to the household's income. Your absence can cause a huge financial strain on your family. Your dependent's - be it your parents, your spouse, or your children- can bear the brunt of paying off your home or education loans or other liabilities.

Disposable incomes are higher at a younger age whereas liabilities are lower. An unmarried professional has less financial liabilities as oppose to a married professional, which has to provide for the financial needs of the family. With more and more working professionals opting to marry late, disposable incomes have increased. With less liabilities at hand and more disposable income, a term insurance cover becomes a sensible investment for the future.

Sound financial planning is essential to plan for various important events of future. Term plans are thus ideal because they let you increase and decrease cover at important stages, such as marriage and childbirth. Similarly, you can opt for reducing the cover you are getting, and your premium. This adjustability factor helps you to be adequately covered at all times.

Any liabilities such as home loans or car loans or any other purchase against which loan has been taken, a term insurance plan stands as a safety guard to protect your dependents in case of your unfortunate demise. The sum insured payable by the insurance company, can be used to pay off the pending loan requirements of the loaner. This, on the other hand, can also be used to leverage at the time of purchasing the loan. Creditors are comfortable in issuing higher loan amounts to debtors with term insurance, since the risk of loan non repayment is mitigated. Alternatively, if a client is a millennial shopper and frequently buys products on EMIs, then having a term insurance can also improve CIBIL rating.

Term insurance also saves tax. A term insurance policy provide income tax benefit in two ways. Under section 80C of income tax act, you can avail tax benefit on the premium paid towards the policy. Secondly. the maturity benefit offered under some of the term insurance policy (specially Term Return of Premium Plan TROP) are also eligible for Tax exemption under section 10(10D) of Income Tax Act 1961. So the earlier you opt for this cover the more you save.

Term insurance is especially important if the insured is the sole bread winner of the family. Not only term life insurance is cheaper at a young age, it is also the cheapest of all the insurance options available in the market.