Life Insurance: the first image that comes to most people’s minds upon hearing this phrase is some variation of an old couple playing with their grandkid. We are often misled by the thought that life insurance is for old people and that we could invest in it about thirty odd years later. In fact, people in their twenties don’t even think about life insurance as something that they need to invest in at their current stage in life. Why then, is it said, that an investment in life insurance while in your twenties is much more beneficial than one when you are in say, your fifties? We’re here to tell you just that.
Life insurance is not something that any individual with insurable interests can decide to do away with. After all, as morbid as it may sound, the fact remains that it is the certainty of death that makes the life insurance industry thrive. It is also what makes every individual realise the importance of life insurance, especially those people who have some dependents such as a spouse and children. So it is definitely not something anyone can avoid investing in. However, it is true that investing in life insurance from an earlier age is always more beneficial than investing in it as a senior citizen, either at the same cost or even at a lower cost.
Following are some of the most prominent and valid benefits of buying a life insurance policy when you are in your tender twenties:
Health is wealth
One of the biggest reasons for this is the fact that one is much healthier in their twenties than they would be in their fifties, and insurance companies charge a relatively lower premium to a healthier younger individual. As one grows older and accumulates more and more health ailments and problems, insurance companies are more and more reluctant to allow lower premiums. Hence, this is a direct impact on one’s cost of life insurance. In any case, there is an absolute undeniable guarantee that your insurance premium, once locked at a particular amount (comparatively lower when you are young) is going to stay the same and not increase.
Another reason that life insurance works out cheaper in the long run is the fact that most insurance providers stay competitive by providing a lot of loyalty benefits to their customers. Either premiums get reduced or the coverage of the policy modifies conditional to the loyalty of the customer with that particular insurer. Hence, if insured at twenty, by the time one is fifty, he would have a much more beneficial cover than someone who invests in a new policy at fifty.
There is another, slightly lesser discussed advantage of getting life insurance when you are in your mere twenties: policy loans. At a young age, we have bigger investments to make in our education, our personal lives, our kids’ education and so on. Having a certain amount of cash value in our life insurance account allowed us to access a part of this cash value, if so required, in the form of policy loans. Of course, this would affect the death benefits and the cash value in the account and one would also be compelled to pay interest on the loans but this amount can soon be replenished in one’s account by the time of retirement. This can be useful to finance your wedding, your kids’ schooling or to pay off your own college fees or student loans. There are expert agents to guide you in how best to take advantage of policy loans from your life insurance policy account.
Saving can save you
Another advantage of opting for a life insurance policy at an early age when one has just begun earning is the fact that setting aside a monthly or periodical amount to pay off as one’s life insurance premium helps to ensure that we are constantly saving a certain amount every month or at regular intervals, depending on the insurance policy requirements. In simpler words, paying a premium at regular periods helps to get one in the habit of saving at a very early age, even from a comparatively nominal salary in one’s early years of their career as compared to a salary probably being earned by say, a forty to fifty year old individual. This is a factor that is gaining more and more weightage and value as general expenditure levels are increasing and people’s standard of living is getting better, on the dependence of the same paycheck. If you can save some amount from even such a nominal amount, you’ll definitely be able to save up for the bigger things in life.
Paying your life insurance premium from your salary can get you the much coveted tax benefits that every salaried employee is after. This is in the form of an 80C deduction which helps reduce your taxability if you pay your own life insurance premium. This matters even more when you have a lower pay package and cannot afford to lose any of it in taxation. At such a time, even the merest amounts of tax deductions are extremely beneficial and important.
It is definitely safe to say that life insurance is an absolute necessity in one’s life, however healthy one’s lifestyle maybe. Death is, of course, certain and while there is nothing that can be done to bring somebody back to life, leaving a protective cover for the deceased’s loved ones is some form of comfort and solace. However, what is more important that simply having a life insurance policy is investing in this policy when you are just starting out, that is, sometime in your twenties as soon as you have some stability in life. Invest in a life insurance policy so that you can live comfortably and to the fullest in the years to come. The earlier you start investing, the bigger is your pool of funds, after all.
(The author is founder and CEO, PolicyX.com)