So you are under 30, and thinking about Life Insurance? Here are some things to keep in mind so that you can maximize the advantages of an early start:
Start Early - Let Your Money Grow Itself
Starting early has several benefits. If you are considering a money-back insurance plan, starting early lends more time for your money to compound.
Buy When Young - Pay a Lot Less
Also, when you are young insurance costs lesser. The older you get, higher the premium you pay for the same cover. If you buy early you also choose to get a much higher cover. For eg. The annual premium for a Rs 1 Cr. Online Term Cover for a non-smoking male will be just Rs 6400 at age 28 vs Rs 12,200 at age 38.
Evaluate Your Options Carefully - Think Long-Term
The sooner you start, the earlier you will reach your goals. For most people, a financial planning exercise is an eye opener. Based on your needs find a suitable investment option. As a young investor, some of these recommendations might seem “too early for you”. However, think long term. This is especially true for Growth Plans and Retirement Plans.
Build Your Insurance Portfolio - Based on Life Needs
As you progress in your personal and professional life, you will have more assets and probably take up liabilities like loans and mortgages too. Also, as a young parent, you might start planning to save for your child’s education. Revisit your insurance portfolio based on the changing needs in your life. You can gradually build the Sum Assured and start investments for long-term goals like retirement.
Choose the Sum Assured Carefully
The Sum Assured is the life insurance cover you need to provide for your family's financial security in your absence. It can be calculated using this Human Life Value Calculator. Since you are under 30, you can opt for a Sum Assured that is at least 15 times your current annual income.
Keep learning about financial planning and keep investing. Remember, Income - Savings = Expenses!