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Never too early for the right insurance

by Money Puzzle   ·  December 6, 2019   ·  

Never too early for the right insurance

by Money Puzzle   ·  December 6, 2019   ·  

Photo by Porapak Apichodilok from Pexels

You have just started working, no family, parents are still earning and hence, not dependent on you. You are young and fit – life insurance is surely not what you need to think about. Afterall, life insurance is needed for your dependents if there is the unfortunate event of your untimely death. Not only do you not have dependents, but who wants to think of death at 25?!

While this is true, its also a fact that the earlier you take on an insurance the cheaper it is. Think of it like a discount for being young and fit.

Is that reason enough? I would think so. Hopefully, the numbers below will help you understand. This applies not only on life insurance but also on medical insurance. For the latter especially you needn’t wait till you have dependents.

Low cost means more saving – The life insurance you take today can be continued at the same price for its entire term of 30-35 years. The same cover taken ten years on will mean a much larger premium and that will eat into your future savings. Take a look at the kind of difference in cost you are looking at.

Let’s say your salary now is around ₹10 lakh a year; at the age of 30, if you take a simple term life cover (this is the only type of life insurance that matters) worth ₹75 lakhs sum assured, you will have to pay a premium of anywhere between ₹7,000-9,000 ( for women and ₹8,000 – ₹10,000 for men) a year depending on the life insurer and the policy details.

This policy will be valid till you are 70 years old.  This is really the cost of two Saturday night outs in a year!

Fast forward 10 years – at the age of 40, the same cover or sum assured of ₹75 lakhs, will cost ₹12,000 -15,000 annually for men and ₹11,000 – 13,000 for women. Except, by then you will need a greater sum assured as you may have dependents in the form of your spouse and children or aging parents. If you double the sum assured, the premium payable also doubles.

Rather than waiting till your dependents arrive, take a life insurance policy early in life and then keep topping it up every 5 or 7 years as your income and dependents profile changes.

Secondly, the later you take on life insurance, the greater the risk of lifestyle ailments impacting your premium. STARTING EARLY MEANS SAVING COSTS. Which in turn means more money of investing and wealth creation!

Will I get the premium back?

The idea that you are paying for something you may never get any return from is quite unpalatable in our society. Just like many people consider paying rent as money down the drain, many feel that paying an insurance premium and not dying is also money (premiums paid) down the drain.

As a result, many of us look for insurance plans that double up as investments. Read this article to know why you shouldn’t do that.

This is really not the right way to think about insurance while making your choice.

You could think of opting for a term life insurance policy with return of premium, but guess what the premium you have to pay for getting the same cover doubles! Remember, everything comes at a cost. 

This is another reason to start your life insurance policy early and get the maximum possible cover so that you lock it in at the lowest possible cost. Doing this will mean you are –

  • Better prepared
  • Save on costs
  • Have more money left to invest
  • Are not concerned about not making a return, as the cost is so low!

It’s really a win-win to start early. With all the digital platforms and cheaper online term life insurance policies offered by insurers, not taking one doesn’t make sense. The online policy is easy to choose and is cheaper because there is no embedded agent commission in the product.

Be smart. Be prepared. Be insured.

There is no such thing as too early for a pure term life insurance; if you are earning you should be insured. But keep in mind, its only TERM life insurance policy that you need.

1 Comment

  1. […] assets like bonds and equity with an aim to receive income or gains… More and secondly, it’s never too early to get the right […]

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