Life insurance policy is usually looked upon as an investment, which can be opted for at a much later stage of life, when one gets old. Most young age earners usually tend to concentrate on high-risk investment options like equities while the risk averse investors tend to focus on fixed income instruments for investment. Making an investment in insurance policies for such investors is a distant financial goal. However, availing insurance policies is crucial as it not just acts as a replacement income for your dependents in your absence but even provides maturity benefits in form of long term returns in case you avail ULIPs. Note that all such benefits through insurance are available at a lower premium for those applying for it at a young age.
Also, as there are different types of life insurance schemes designed to meet different purposes, you should ensure to compare among them to figure out the one as per your suitability or requirement. Different types of life insurance policies include term insurance, ULIPs, endowment plan etc, wherein term policy should be highly considered by all young age earners as it insures a higher sum assured at a nominal premium as compared to other insurance products.
Below, we will list some important benefits of availing life insurance at a young age:
You pay a lower insurance premium
Purchasing an insurance policy at a young age costs you less premium in the long run. Low premium is charged from those who are young because insurance companies factor in 2 major parameters to determine the premium – applicant’s age and their usual health condition. As those in their 20s or 30s usually tend to have better health than the mid age or old age earners, the premium charged to the young age earners are more affordable than the older ones. Old age earners are charged higher premiums owing to the insurance risk, which the insurance companies bear when providing them the policy as such individuals risk of dying is much higher as compared to the young earners. Thus, take the benefit of this provision and invest in insurance at an early age.
Your money gets adequate time to grow
When you purchase a life insurance scheme at a young age, your money gets sufficient time to grow. As an outcome, maturity or death benefit received towards the end of the insurance term is even greater for the young investors. For example, if you purchase a life insurance scheme at 24 years of age and continue with it until 60 years of age, your invested money would have 36 years to accumulate your post retirement corpus. However, if you purchase the life cover at 45 years of age, you would just have 15 years in hand to make your investible amount grow. Note that, investing at a young age can thus enhance your investment value over the long run.
You secure your dependents future
Usually, by the time you reach your retirement age, your chances of having accumulated a sizable post retirement corpus to financially take care of your dependents is high. Also, when nearing the retirement age, many earner’s wards’ usually are either at the verge of finishing their college or just beginning their work career. However, for the young age earners who just begin with their career, their family might be in a vulnerable position, particularly for those who are sole earners. In an unfortunate event of their demise, their spouse, young wards would find it extremely difficult to cope up with no financial assistance. Investing in life insurance, particularly term insurance at a young age can endow your dependents this benefit.
Bottom line
Young age earners should ensure to use an online life insurance calculator to choose the right policy by comparing among different plans provided by various insurance providers. Apart from this, such calculators even enable you to calculate the exact premium as per your required cover.