“A mere ignorance at the initial phase might take the face of arriving catastrophe at the doorstep” ~ Unknown.
At a young age, most probably in your twenties, you are all set to take the initial step of earning all you dream of saving, buying a home, providing for your family, encouraging work-life balance, and other life-related thoughts.
But, most young adults in their aspiring twenties forget to add one stress to their kitty, which is the unexpected series of buffers.
And to safeguard oneself and the near and dear ones from the unexpected happening in life, every young adult, especially a 25-year-old (when they have saved a bit from their earnings), should start thinking about purchasing a term insurance plan.
This blog will answer your dilemmas like –
- What is life insurance?
- How is term insurance better than other types of insurance?
- What is the best term insurance plan to buy in India?
- What is the best life insurance to buy at the age of 25?
And other peripheral doubts related to term insurance.
What is Life Insurance?
For instance, you are the sole bread-earner at home. Life insurance shall safeguard your family in dire times (in terms of economic aid) even when you meet with an untimely death.
Death is an unexpected event, and this is the phase where many people back off from lending economic support when you need it the most. And this is where life insurance comes to play.
An insurance company won’t compensate for the unfortunate incident. Still, we step in to stand with the family as a firm pillar and fulfill the wish of the departed soul, that is, to provide economic support.
What are the types of Life Insurance in India?
There are multiple kinds of life insurance available in the insurance world. One should consider investing in the best amongst the many based on their need, requirement, and planning rather than investing for the sake of having a safety net.
Different types of life insurance are as follows:
Term Insurance: This type of life insurance policy provides coverage for a certain period. And, if the Policyholder dies during the term, the Nominee receives the sum promised.
A term insurance policy’s advantages are not restricted to death rewards. Some companies provide coverage for the Policyholder’s permanent or partial incapacity. The money promised might be obtained in the form of a lump sum or as a mix of a lump sum and a monthly amount.
Term Insurance with Return of Premium: It is one of the term insurance policies that reimburse you for your payments if you survive the policy duration.
Unit Linked Insurance Plans (ULIP): ULIPs are investment vehicles that combine the benefits of insurance and investing. ULIP plans assist investors in building a solid financial corpus for the future.
These insurance plans are connected to the stock market, and the premiums are paid in two elements:
1. One tangent pays off the insurance premiums plans, and the other is invested in the equity share.
2. Assists the insurer in allocating share plan units to policyholders. Every assigned unit has a certain value that fluctuates every business day based on market movements.
Endowment Plans: An endowment plan is a type of life insurance that combines savings and protection into a single policy. It helps you create a corpus in a systematic and sustained manner over several years. At the same time, it offers financial security for your loved ones during untimely catastrophes.
Money Back Policy: The goal of investing in an insurance policy in India for your family might be to develop money over time. However, most forms of life insurance do not provide any mechanism for receiving payments before the Policy’s term expires. It is where a moneyback policy can help solve the cash flow problem.
Whole Life Insurance: A whole life insurance plan differs from other forms of life insurance in that it offers insurance coverage to the insured for the duration of their life, up to the age of 100.
In most cases, the death benefit under a whole life insurance policy is paid to the beneficiary in the event of the Policyholder’s unfortunate death. On the other hand, if you reach the age of 100, you are entitled to a maturity bonus under a whole life insurance policy.
Group Life Insurance: This branch of life insurance covers a cluster of people under a single umbrella policy. These forms of life insurance are typically given as part of an employee benefits package.
Child Insurance Plans: None wants any buffer (mainly economic) when parents provide their kids with education, security, marriage, etc. Child Insurance Plans assist you in your endeavor and help safeguard their future by giving wings to their aspirations and necessities.
Retirement Plans: Such beneficial pension schemes are insurance-led investment programs that help develop a sizable retirement corpus overtime for a stress-free retirement.
You invest your earnings in them over time, and the insurer invests on your behalf to create income throughout your post-retirement years. You can choose to withdraw the corpus as a flat amount or as a predetermined monthly income.
There are a few types of insurance that one could use as their safety net.
What is Term Insurance?
If we talk about India, term insurance is one of the most popular forms of life insurance. As the name suggests, they are purchased for a specific set of years, such as 10, 20, 30, and beyond, depending upon one’s need.
In term insurance, if the Policyholder dies during the term, the Nominee receives the sum promised. The insurance must be active at the time of the Policyholder’s death for this to apply.
But, a term insurance policy’s advantages are not restricted to death rewards. Certain insurance companies provide coverage for the Policyholder’s permanent or partial incapacity. The money promised might be obtained in the form of a lump sum or as a mix of a lump sum and a monthly amount.
Term insurance, unlike certain other forms of life insurance policies, does not provide maturity benefits. It is one of the reasons why term insurance, the best insurance policy in India, is less expensive than other forms of life insurance policies.
You may also choose a large life cover at a cheaper premium than other forms of life insurance policies that are more expensive but include built-in savings elements.
What is the ideal age to buy Term Insurance?
You can buy it when you hit your adulthood, and that is 18. But, according to us, the ideal age to purchase term insurance is around 24 or 25 when you would have worked for two years and have some savings.
The twenties should be the ideal age because it’s a tender time to work and chalk out new ways to increase your earnings or multi-task the most.
Usually, the only pressure that hovers over you is to build your career. Therefore, the twenties is the ideal age to begin investing in term insurance.
Buying term importance at a young age because:
- A saving kitty for taxes
- Economic and family protection
- You could add benefits (based on circumstances)
- Low chance of rejection as compared to the ones in the thirties (as you are more healthy at this age)
- Lower Premiums
What is the best term insurance to buy at a young age?
When buying term insurance, it should be the best rather than settling for an average product. Some of the best term insurance a young soul should consider buying are as follows:
Aditya Birla Sun Life Insurance DigiShield Plan
- If you believe that the Almighty would keep up your health till you hit a century, ABSLI DigiShield is for you. Enroll yourself at 18, invest rightly, and sit back because you have opted for one of the safest
- The death benefits are adjustable and can be paid out monthly installments, lump sums, or both.
- On reaching the age of 60, you have the option of receiving a survival benefit as a monthly income. This benefit paves the way for a tension-free retirement.
- The maximum maturity age differs based on the selected Option plan.
- Survival Benefit
- Terminal Illness Benefit: If you are diagnosed with a terminal illness during the Policy Term, up to the age of 80, and the Policy is still in force, you will receive a lump-sum payment of 50% of the relevant Payment Assured on Death, that is up to a maximum of Rs. 2 crores and all future premiums will be canceled.
- Death Benefit: In the instance of the Life Insured’s untimely death within the Policy Term, the Death Benefit will be paid to the Nominee (s)/legal heir(s) specified by the Policyholder under the Plan Option. Always remember that term insurance is beyond the death benefits.
Note: As this term insurance comes with ten options, one must go through every Option in detail to better clarify which Option plan one should buy as per their pocket allowance and requirements.
To know more about this beneficial term insurance for people from different walks of life and ages, read about the ABSLI DigiShield plan.
When few decisions are made at the right age, you remain sorted for inevitable tangents of life, and life insurance is one such thing.
When you know you have the best, bag it before the apt time departs.