The uncertainties of healthcare happenings emphasize why millennials need to secure their future and that of their families via term insurance plans.
A common misconception about millennials is that they don’t give a shit about insurance, given their lousy and “I know what’s best for me” attitude towards life. But ask any savvy millennial and they will tell you that the COVID-19 has driven home the point that everyone needs insurance, particularly term insurance aka life insurance. Thanks to the unexpectedness of healthcare events and expensive medical care costs, be it COVID-19 or chronic ailments, term insurance plans are best for people who have a FOMO on good health insurance packages.
Recently Gen Y have been seen purchasing health and life insurance for the COVID-19 cover in record numbers. Besides basic medical expenses, the financial security of their families is what works overtime on millennial minds. But naturally, term life insurance can play a great role in offering financial and emotional security.
Life insurance policies offer death-risk cover for certain periods. In case a policyholder takes off for heavens, the nominee receives the sum assured amount either as a one-bullet payment or via monthly payouts. Life insurance provides max coverage at minimum premiums. Millennials benefit by investing in such a policy at a lower premium because of their lower age of entry.
Approx 426-million millennials in India make up about 34% of the population and about 47% of the nation’s total working guys and gals. Tech-savvy as ever, millennials are gung-ho about online term insurance policies because buy Life insurance online is as easy as going through your Facebook on the toilet seat.
So, let me show you how much more I know about this than you, let’s get on terms with various insurance policies available. In India, seven types of life insurance policies exist. The first is term life insurance – highlighted above. The second is ULIPs (Unit-Linked Insurance Plans), which offer the triple benefits of insurance, wealth creation and tax savings, things millennials dig. ULIPs are so named because the premiums are invested in funds as well as risk cover.
Third come endowment plans – a combo of insurance coverage and investment opportunities. In case a policyholder goes to the happy hunting grounds, the sum assured goes to the nominee or the family. If the insured person outlives the policy period, s/he receives the sum assured plus the accumulated bonus. Fourth are money-back policies. Here, the insured person receives specified sums at intervals during the policy period and a sum assured, either on death or maturity. Accrued bonus is also paid on maturity.
The fifth is whole life insurance, which covers an insured person during his/her lifetime or, in some cases, up to 100 years. If the policyholder passes away, the nominee receives the sum assured. If the person lives past 100 years, s/he is paid the maturity amount.
Sixth comes the child plan. Such an insurance plan builds the capital base for milestone events in the child’s life. These can range from higher education or overseas studies to marriage and other events. Most child plans offer one-time payouts or yearly payments once the child reaches maturity at 18.
The seventh is the retirement plan, which helps in building substantial capital for ensuring stress-free retirement years. Policyholders can opt for a single payout after reaching 60 years or annual payments. If the insured person meets the Maker, the nominee receives a payment as per coverage or the fund value or 105% of the premiums paid. Isn’t that cool?
According to need or greed, millennials should decide which term life policies set with their life cover and investment goals. Moreover, as the pandemic has proved, even the best plans of individuals and institutions can go for a six when a black swan event strikes. The situation is worse if a person is a sole breadwinner and suddenly slinks away into everlasting peace.
In such scenarios, term insurance plans are best for millennials since they generally offer insurance covers for predetermined periods of 30, 40 or 50 years. Going by individual needs, one can opt for comprehensive coverage or go for policies by buying beneficial add-on riders. To reemphasize, purchasing term insurance early can offer more bang for the buck as the low premiums remain constant throughout the term even if the insured person’s risk profile changes.
As medical emergencies are notorious for pushing people into bankruptcy, term insurance ensures the family has something to fall back on even if the earning person is now in RIP mode. For caring millennials, there can be no better motivation to purchase a term insurance plan than the security of their loved ones.
(By Akash Anand, Founder & Managing Director, Bimakaro)