Is investing in Life insurance in 20s The Right Time? - Greyfont

Is investing in Life insurance in 20s The Right Time?


It is important you secure your life with a life insurance plan that ensures you and your family enjoys a healthy financial future. If you are in your 20s and have a dependent family, then investing in a life insurance policy at a young age can give you innumerable benefits. Read the below article to understand why you should be investing in life insurance at an early age.


Types of life insurance policies you can opt for: As per your budget and requirement, you can select from the below types of life insurance policies.


Term Plan:

  • This type of insurance plan provides death benefit to the beneficiary only if the insured dies during the term of the policy.
  • It offers high coverage at low premium rates.
  • A pure protection plan does not provide any maturity benefit.


Endowment Plan:

  • It is a mix of savings and insurance that helps you build financial corpus while also providing protection.
  • In case of death of the policyholder, benefit is paid to the nominee.
  • In case of survival, maturity benefits along with bonus (if any) is given


Money Back Policy

  • This is a savings cum investment plan that provides a certain percentage of sum assured to the policyholder at regular intervals.
  • Pay-outs are generally during the time of child’s education, marriage or during insured’s retirement.
  • Survival benefit is paid if the policyholder is alive.
  • On death of the policyholder, the nominee receives the full sum assured along with bonuses if any.


Whole Life Insurance Policy

  • Provides life insurance coverage to an individual till the age of 100 or as long as he survives.
  • Policyholder is required to pay premiums till death or till a specific period of time.
  • Nominee is paid the sum assured along with bonus on death of the insured.
  • Nominee is paid the sum assured along with bonus on death of the insured.


Child Plan

  • Helps you build wealth for your child’s education or marriage.
  • Protects your child’s future in case of your unfortunate death


Pension Plan

  • This type of plan provides you with steady income flow post retirement.
  • Helps you build a healthy financial future


Unit Linked Plan

  • This is an investment cum insurance plan.
  • A part of the premium is invested while another part is used towards life insurance.


Benefits of investing in life insurance at an early age


Low premium rates: One of the primary benefits of investing in life insurance at an early age is that you will have to pay fewer premiums. This is because when you are young, you are less likely to contract any life threatening illnesses. Hence, insurance companies are at low risk when insuring young individuals. For example: If you are a 26-year-old working female earning 5 lakh per year, having no smoking or drinking habits, then the premium you would have to pay for a cover of 90 lakh is Rs. 3, 549 for a term life cover.  Whereas, if you are a 46-year old female earning 5 lakh per annum, having no smoking and drinking habits, then you would have to pay premium of Rs. 5, 345.


You can fulfill your short term goals easily: If you have a life insurance plan, you can always look to get a car loan, home loan, keeping the policy as a collateral against getting the loan. By doing this, you can always fulfill your short term goals without having to worry much.


Enjoy tax benefits: A life insurance policy acts as a good tool for helping you save on taxes. With investing in any life insurance policy, you can claim tax deduction of up to 1.5 lakh under section 80C of the Income Tax Act, 1961. Additionally, you can also get tax benefits on the returns under section 10(!0D) of the Income Tax. So if you are earning well and are looking to save on taxes, then investment in life insurance policy makes for a good choice.


Initially, though you might want to opt for a coverage of about 20-30 lakhs, but as you would get married and have kids in the future along with additional responsibilities and also keeping the inflation in mind, it is always a wise idea to opt for a wide coverage. In the future, you surely would not want to compromise on your current lifestyle. Ensure that underinsurance should never prevail in your life. Always opt for a wide coverage in your 20s to enjoy a healthy financial future."


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