As we are in wake of nuclear family and inflation is exploding our financial life, life insurance has become a vital financial weapon in this situation. It is paramount for every individual to first adequately insure his life for the financial security of his/her dependents and then proceed to address other aspects of financial planning.
Life Insurance also has lot of sentimental value because it is an effort by the life assured to ensure that his loved ones don’t have to suffer after his demise. But life insurance shouldn’t just have sentimental pull. It should also be something that we plan for keeping in mind every stage of our life. Nowadays, life insurance offers more than just life cover protection. Let’s explore this thought in detail.
In your 20s
20s is the most enjoyable age in a person’s life. Fresh out of college with loads of hopes and aspiration, you take the first steps in your career. Some of you may even go for higher education. When it’s the age of enjoying every moment, insurance hardly fits into your perspective, unless as a tax saving vehicle for your newly earned salaries. As you are planning for the first stage of your eventful adult life, uncertainties like death or illness seem to be a remote possibility, and insurance is the last thing on your mind.
But there is a critical advantage of opting for life insurance at such an early age – low premiums. At this stage of your life, your savings are minimal, as you have just started working. And this is not to mention the carefree life you are still probably inclined towards. You may often push your decision to buy insurance into a distant future. But there is a ‘cost of postponement.’ In life insurance, premium rates are directly linked to your age. The earlier you buy insurance, the cheaper it is. For example, a 25-year old youth needs to pay about Rs 2,888.6 per year for a regular premium online term plan like Click2Protect 3D Plus for 30 years term and Rs 10 lakh sum assured. If he opts for the same at the age of 35, he will need to pay about Rs 5142, which is an extra Rs 8,11,224 compared to a 25 year old guy!
Insurers offer lower premiums to young people as they are mostly fit and healthy, which automatically implies a lesser possibility of death and risk.
In your 30s
Obligations and responsibilities –a new family, new home, bigger car – start to take up all your time. You may even have started semi-permanently settling in a job or got a couple of promotions. All this starts changing your thought process and brings to the forefront the need for financial planning, especially if you are the sole bread earner in your house.
When you start a family, the biggest worry that plagues you is their financial dependence after your death – basically income replacement. You don’t want them to go look for alternatives to your income or leave them without some sort of cushion that would make their life a whole lot easier. Your untimely death could put a wrench in all your best laid plans that may include anything from children’s higher education to owning your mortgage-free home. Life insurance serves well as that cushion, like Click2Protect 3D Plus, which offers the Income Replacement Option. Under this option, upon the unfortunate demise of the policyholder, the nominees receive a regular monthly income for the term of the policy along with a lump sum benefit at the time of death.
Here is a video about buying Term Insurance policy at a young age:
In your 40s
Having enjoyed your carefree 20s and your slightly less carefree 30s, the current decade will now be bringing home the importance of financial planning and the part that life insurance plays in it. This is the age in which financial obligations are not only at their peak but also giving you a massive headache, especially considering the fact that you’re already half way done with your working years. The looming personal loans and the retirement years make it vital that your savings not only compound but also ensure you have a stress-free future ahead of you.
Most people already have an investment portfolio with a few insurance covers littering it. If you are one of those people, it is time to start reviewing them based on current prices and the rate of inflation. But if you are a procrastinator, then considering a life insurance policy now is extremely vital to your financial planning. You not only want to keep your family away from financial burden, but you also want to make sure to leave a legacy for your children.
Click2Protect 3D Plus offers the Life Long Protection Option, which allows you to stay covered for the whole of your life.
In your 50s
After making sure your children are taken care of, it is time to start thinking about your future and your health. Your employment years are nearing an end, making you feel wary of the looming income-less years. But this need not be the case. Instead of depending on your children, it is better to make sure you and your spouse are financially independent and are able to continue living the life you are used to, without any hiccups. Towards this end, Click2Protect 3D Plus provides the options of 3D Life Option and 3D Life Long Protection Option, which not only make sure your spouse is taken care of in your absence, but also provides waiver of all future premiums upon diagnosis of any of the 34 critical illness listed in the policy.
A financial plan is very important and life insurance is integral part of that financial plan and life insurance should be based on considering all factors of different life stages of a person and it should be protective first than it can be used as savings and wealth creation tool. Life insurance these days serve several purposes in addition to simply providing your family with basic monetary relief once you are gone. It is, therefore, a good idea to think about insurance the next time you want to invest your money wisely.
This article is contributed by HDFC Life team
Read more about Reasons to buy term insurance before you turn 30
Read more about Should I buy term insurance riders.
Read more about 5 reasons why you need life insurance