Why is your term plan premium lower when you are younger?

Updated: Mar 20, 2021 11:28 AM

Buying a term insurance plan not only ensures protection but also helps save tax. The premium paid qualifies for tax benefit under Section 80C of the Income Tax Act.

Kotak Life Insurance, YOLO, term insurance plan, Kotak e-Term Plan, income taxHaving a plan in place early on in life may prove to be the best step forward, the realization of which may come a few years down the road.

Emerging out of the teens, the life of a working adult has its own shades of varying experiences. From being a carefree, independent person to taking impulsive buying decisions, and making every moment count is what most youngsters believe in. All things considered, YOLO – You Only Live Once – is the way most young people enjoy living their life.

At the same time, many youngsters seem to be much aware of and are increasingly taking interest in money matters. Even though they lead a high-octane lifestyle – from earning well to spending on new gadgets and dining out frequently, many of them are concerned about their financial future as well.

Those who aren’t may have to bite the bullet later on in life. The time to act is now! In case you are an unmarried working individual, to save and contribute for future goals such as home buying may be your primary goal. But once you get married and have kids, financial liabilities add-up in life. Having a plan in place early on in life may prove to be the best step forward, the realization of which may come a few years down the road. Indeed, even married couples with or without kids need not stand-by but plan for goals that are most likely to come up at various phases of life.

However, saving money may be just a single piece of the bigger plan. An untimely death may derail the goals, leaving the surviving family members stranded for funds. To make sure your family’s dreams and aspirations are achievable even in your absence, they need to be protected. This is best met by taking extra security, ideally through a term insurance plan.

In a term insurance plan, the nominees get the life cover (sum assured in insurance parlance) if the death of the insured (policyholder) happens during the policy term. On surviving the term, there is no maturity value paid to the policyholder. A term insurance plan is the purest form of life insurance which makes it a low premium plan with a high cover i.e., sum assured.

Benefits of buying a term plan early

The right time to buy an insurance cover preferably through a term insurance plan is when one has financial dependents. Purchasing a term plan early on in life has its own advantages. Here are some key upsides of buying a term insurance plan early in life:

  1. Buying early keeps premium low

The premium that you pay to get life cover depends on your age, policy term and the sum assured. The lower the age, the lower will be the premium with other factors remaining constant. It means, even at a higher age, you will keep paying the same premium originally fixed while buying the plan. Purchasing a term insurance plan early in life helps to keep paying the same low premium even as you age.

  1. Helps to keep goals on track

Life goals such as children’s education, buying a home etc. are self-funded but may get jeopardized if the bread earner dies before they get accomplished. Having purchased a term insurance plan, you ensure that your life goals will be met as and when they arise at different life stages. The death proceeds from the term insurance plan help to keep the goals on track.

  1. May have dependent parents

If you are young, single and have parents who are financially dependent on you, having term insurance becomes important. As your age and financial liabilities increase, reviewing your life insurance needs will become equally important.

  1. Avoid paying extra charges

At a young age, the probability of having any adverse health condition is less. Buying an insurance cover at an early age helps meet the medical underwriting requirements without having to pay any additional premium.

  1. Rising mortality rates

One of the major parameters that determines the premium is based on the mortality rate which is the number of deaths per thousand of population. A higher mortality rate pushes the premium high as is seen in the case of individuals buying term plans at a later age. This mortality rate may witness a rise over time and as term insurance plans are purchased for a long period, which may be 25-30 years, buying it early will keep the premium low.

  1. Tax Advantages

Buying a term insurance plan not only ensures protection but also helps save tax. The premium paid qualifies for tax benefit under Section 80C of the Income Tax Act, that helps you reduce your tax liability during the financial year. Nowadays there are many instances of both spouses working to sustain household expenses. When both companions work, it is important that there is insurance coverage on the lives of both spouses and not only on the one who is earning a higher income. The tax benefit can be availed by both the mates separately depending on the amount of the premium paid.


Kotak Life Insurance offers a suite of Protection Plans uniquely designed to secure your life goals at every stage of life. If you are young and looking to take the life risks head-on early in life, it’s time to shed any procrastination. Wait no longer and get life protection at the earliest. For you, buying a term insurance plan should be the starting point of your financial plan. Kotak Term Plan is one such protection plan that can be considered if you are young and looking to get insured. For those looking to buy it online, Kotak e-Term Plan is the plan to choose. With hosts of flexible and customizable options, all your needs will get addressed by purchasing any of these term insurance plans. Adequate protection through a term insurance plan will help you move ahead in life with more confidence and bereft of worries.

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