When you are in your 20s, life might seem to be busy – figuring out how to adult, juggling your first job, getting a side hustle, or even planning that epic vacation that you always wanted. But life insurance? Sounds like something your parents might worry about. Now, here’s the truth: life insurance is a necessity and planning early can give you a major head-start on financial stability. You get flexible options, lower premiums, and time on your side.
So, whether you are salaried, self-employed, freelancing or somewhere in between, all these are trying to figure out how to navigate the world of life insurance; this article will be a guide for you.
Why You Need to Consider Life Insurance in Your 20s?
Firstly, let’s clear up one common misunderstanding – you do not need to be married with two kids to think about getting a life insurance plan in place. Think of this like buying an early bird concert ticket. You know the price will only rise with time, but you lock in when it is cheap. Similarly, when you get a life insurance plan early, the insurance provider provides you with the best deal available since you are young and healthy. As you grow older, the risk of life-threatening issues grows, and therefore, the premiums also rise. Plus, life insurance also helps you to force yourself into a disciplined saving habit early in your career.
Apart from all these, life insurance policies are a financial safety net. So, if you buy the coverage early, it means you get coverage for a longer time, so if something unfortunate occurs to you, life insurance makes sure your loved ones are not left dealing with financial chaos while mourning your loss.
Features of Life Insurance You Should Not Ignore
Now, let’s go over the features of life insurance that you should look for when shopping for policies in your 20s:
- Coverage Amount
Do not just pick a random number that comes to your mind. You need to access your current income, lifestyle and any future liability that might come your dependent’s way. If unsure, you can always check online life insurance calculators to get a realistic idea of how much coverage you should go for.
- Premium Amount
In most cases, people are not at the top of their careers in their 20s. So, you need to choose a premium amount that fits comfortably within your monthly budget. Make sure it is sustainable because continuously skipping premium payments can result in lapsed policies.
- Policy Tenure
Ideally, you should go for the longest available tenure for term insurance policies. But if you are considering something like ULIP, you need to consider your financial goals and timeline, and then decide on a policy term.
- Available Riders and Add-ons
Want extra protection? You need to look for riders like accidental death benefits, disability protection, critical illness cover, or other add-ons that provide you with complete peace of mind. Keep in mind that adding riders will increase your premium amount, so choose wisely.
- Tax Benefits
Premiums that you pay towards life insurance are tax-deductible up to Rs. 1.5 lakhs under Section 80C. However, tax deductions on the payout amount depend on the policy type that you choose. Death and maturity benefits are tax-exempt on term insurance and return on premium plans under Section 10 (10D). But for market-linked plans like ULIP, it depends on the annual premium amount. So, do your homework and make an educated decision.
- Claim Settlement Ratio
Not every insurance provider reacts to insurance claims the same way. Check for your insurer’s claim settlement ratio online to get the best experience. The higher the CSR, the better it is.
- Flexibility Options
Some plans give you survival benefits or allow partial withdrawals after a declared lock-in period. Others let you switch funds or increase your sum assured later on. Make sure your plan adjusts as your life evolves.
Conclusion
You need to understand that choosing a life insurance plan early in your 20s is not just about ticking a box from your to-do list – it is about laying the groundwork for financial peace of mind later in your career. You are not just covering your dependents in case of something unfortunate, you are also building smart financial discipline early. Whether you opt for a basic term life policy or explore something more exciting like a unit-linked insurance plan or return of premium policy, the goal is to pick something that matches your unique requirements. Focus on features that match your current income, goals, and lifestyle.
And remember, buying life insurance today means less premium than tomorrow and also one less thing to worry about. So go ahead and secure the backup plan. It might come in handy down the line when you least expect it.
