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How to choose for the right term insurance at a young age of your life?
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How to opt for the right term insurance at a young age?

Preethi is a 21-year-old business analyst with a top financial firm in Bangalore. It has been just three months since graduation, but she is upbeat about her career and has many dreams to accomplish. However, being a commerce student, Preethi is always particular about having a proper financial plan. So, while all her friends were busy spending their first month’s salary in partying, Preethi decided to buy term insurance

A majority of her colleagues who were in their late 20’s and early 30’s were not even having an insurance policy of their own. But Preethi was evident in her thoughts and believed that availing of a term plan early in life would help her lock in at the lowest premium for the entire policy tenure. She also added critical illness rider and accident disability rider to her base policy for safeguarding her health from rising treatment costs in the future. Moreover, because she is young and healthy, her clean medical test also paved the way for the insurer to offer a good discount on the premium. Therefore, for a total yearly premium of Rs 10,000, she had purchased a comprehensive insurance package that is going to serve her for her lifetime.

“Catch them while young” is a popular statement often said to highlight the importance of time. It also applies while buying term insurance, as the premiums for a high coverage policy are very low. Term insurance is the simplest form of planning for the future by securing the financial commitments of your family in case you encounter any unfortunate events like death, terminal illness, accident, etc. when the sum assured is paid back to the nominee.

The need for term insurance

With different types of insurance policies available in the market, term insurance is classified as the best life insurance for young adults. Why there is so much emphasis on term plans is a common question raised by many. There are multiple reasons for it, which are explained below: 

  • A secure financial futureA term insurance policy guarantees to pay the coverage amount in the event of the policyholder’s death as a benefit to the nominee, who, in most cases, is a close family member. This amount is helpful for your partner to manage the family, provide education to your children, and plan for their career, marriage, ambitions, dreams, etc., even though you are not physically present around them.
  • Protect your assets: If you have an outstanding home loan or car loan, or education loan, and in the event of your demise, the debts will eventually fall on your family members, creating a lot of stress on them. Therefore, it is always better to have a stable and secure backup like a term policy, right from a younger age, so you don’t lose your peace while building a lifestyle for yourself and your family.
  • Sudden health risksThe world we currently live in is filled with uncertainty and mystery as new situations arise out of nowhere creating complications. In addition to natural disasters, one is also susceptible to lifestyle diseases, improper diet patterns, and other crucial illnesses questioning the possibility of a healthy life. Buying term insurance while you are young will fetch lower premiums since you are at the peak of your health without any significant health issues. 

 

How to buy the right term insurance at a young age? 

Choosing the right policy from various options completes half the process as it certainly is not an easy task. If you are young and not sure about what features to look at, you might end up buying a policy that doesn’t match your expectations. Below are some essential tips that will help you to select the right policy:-

1. Set financial goalsAssess your current lifestyle and understand your family’s financial requirements in your absence. Being clear about the purpose of the term policy at a young age is very important as it helps avoid buying unnecessary financial products. Start by answering the following questions: 

  • Do you have any existing loans? 
  • How many family members are dependent on you?
  • Do you have any other insurance policy/ health insurance?
  • Are you suffering from any health ailments or undergoing any treatment?

 

Involve your parents or mentor while finding answers for the above questions, which will help you understand the life goals and select a suitable term plan.

2. Compare plansIn the era of the internet, comparing products before buying is beneficial as it helps to know the various unique features of the product and purchase the best out of it. Some websites provide term plan comparisons according to the sum assured, premium, tenure, and other advantages based on your inputs.

We have compiled a list of top term insurance plans suited for individuals in the young age group.

Top term insurance plans suited for individuals at the young age

Plan Name Sum assured (minimum) Policy term (in years) Yearly premium for a 25-year-old male non-smoker
LIC Tech Term ₹ 50 lakhs 30 ₹ 4838
LIC Jeevan Amar ₹ 25 lakhs 30 ₹ 3983
HDFC Click2Protect Life ₹ 50 lakhs 30 ₹ 5625
Aegon Life iTerm ₹ 25 lakhs 30 ₹ 2725
SBI Poorna Suraksha  ₹ 20 lakhs 30 ₹ 4457
Tata AIA Maha Raksha Supreme ₹ 50 lakhs 30 ₹ 5800
ICICI Prudential iProtect Smart Term Plan ₹ 50 lakhs 30 ₹ 6228
Bajaj Allianz Smart Protect Goal Term Plan ₹ 50 lakhs 30 ₹ 5673
PNB MetLife Mera Term Plan Plus ₹ 10 lakhs 75 ₹ 3746
Kotak e-Term Plan ₹ 25 lakhs 30 ₹ 3953

 

3. Understand the plan: Never buy any insurance policy just because any of your friends or relatives have recommended it as they may have missed out on few features, and it could end up as a costly mistake. Instead, accept the suggestions from others but do your research by visiting the insurer’s official website and reading through the policy documents to understand the eligibility, benefits, features, inclusions, exclusions, etc., before signing the policy agreement.  

To get the best out of term insurance plans, experts advise buying at a young age. Buying a term insurance plan is essential, but opting for the right one is equally essential to ensure a comprehensive, financially secure future for your family in your absence. If you are also looking to buy a term insurance policy, then get the right one matching your requirements by visiting iiflinsurance.com

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