Why is early term insurance key to future-focused financial planning?

So, you have finally landed your first job. For the first time, you are not just thinking about making it through the month but starting to think about your future. Investing is everywhere. Your colleagues are talking about stocks, social media is full of market tips, and suddenly everyone seems to be a self-proclaimed financial guru.

But before you start, you need to focus on the real foundation of financial planning – security. And when it comes to securing your finances, nothing beats term insurance!

If you are in your 20s or approaching 30s, getting a term insurance plan should be right up there on your list. Let’s talk about what this is and why it is important.

What is term insurance?

Term insurance is a pure protection life insurance plan. In simple terms, it provides financial coverage in the absence of the policyholder in return for timely premium payments. Here’s how it works:

Consider the example of Sam. Sam is a 28-year-old wildlife photographer. He travels a lot and loves his job. He decides to buy a term insurance plan. If something were to happen to him, the policy would pay his family a fixed amount of money. That payout could help them manage expenses and secure their future, even in his absence.

Why do you need to buy term insurance at such a young age?

It is a fair question. After all, term insurance sounds like something you would think about much later in life, maybe when you are older, have a family and start worrying about the what-ifs. Your 20s and 30s feel like the time for lighter, less morbid things. But term insurance is actually at its most beneficial when bought early at a young age.

Wondering why? Well, here’s how:

1. You get a high life cover that is hard to save up for otherwise

As someone in your 20s or 30s, can you imagine having ₹ 50 lakh, a crore, or even more saved up already? For most people, the answer is a clear no. Building that kind of corpus can take years and sometimes decades. In fact, for many, it may never actually happen.

But term insurance changes the game. It gives you access to a high life cover. In your absence, your loved ones can access this corpus so they are not left struggling financially. They would have the financial support they need to cope with loss and keep life moving forward.

2. You do not have to spend much out of your pocket

One of the best things about term insurance is that while you get a high sum assured, you do not have to pay a hefty price for it. These plans are designed to provide financial coverage only in the unfortunate event of the policyholder’s death. There are usually no survival benefits, and that is exactly what helps keep the cost so low. You can get a large cover without stretching your budget. They are one of the most cost-effective ways to protect your family.

3. You can save more on the premium when you are young

Term insurance premiums are lowest when you are young. Why? Because younger people are generally healthier, less likely to have lifestyle-related illnesses and carry a lower risk of making a claim anytime soon. For insurance companies, that makes you a safer bet, so they reward you with cheaper premiums. The best part is that the premium you lock in at the start stays the same for the entire policy term.

So, say you buy a term insurance plan at the age of 29 with a monthly premium of ₹ 1,500. You will still be paying ₹ 1,500 a month even 10 years down the line. On the contrary, if you were to buy the same plan at the age of 40, your premium will be much higher right from the start. And you would keep paying that higher amount every month for the entire policy term. The earlier you start, the more you save, not just now but for years to come.

By using a term insurance calculator, you can get a precise premium for your age, making it easier to see how much you could save by starting early.

4. You can potentially create long term savings

While most term insurance plans focus purely on protection, some come with a little extra. One example is the return of premium term insurance plan. With this option, if you outlive the policy term and no claims are made, the insurer will refund all the premiums you have paid over the years.

So, you stay protected throughout the policy term and can walk away with a lump sum at the end. This can come in handy for future needs.

5. You can save up on tax

Did you know that term insurance plans qualify for tax benefits under The Income Tax Act, 1961? The life insurance premium that you pay up to ₹ 1.5 lakh per annum can be claimed as a tax deduction. This can help you lower your taxable income and save a lot of money over the years.

Term insurance is also tax friendly for your loved ones. The insurance payout that is given to your family in your absence is completely tax-free. So, they have nothing to worry about in terms of taxes.

6. You can live your younger years free from stress

Term insurance gives you something that is hard to put a price on. It gives you peace of mind. You do not have to keep worrying about what would happen to your loved ones if you were not around. You know you have done what you could to protect them.

No matter what the future brings, they will have the financial support they need to manage their expenses and maintain their lifestyle. And knowing that will let you enjoy your younger years with fewer gloomy thoughts hanging over your head.

Conclusion

Buying a best term insurance plan early comes with more advantages than you might expect. You lock in low premiums while you are young and healthy, and you secure a high coverage amount that will stay with you for decades. It is undoubtedly one of the smartest ways to strengthen your financial foundation and protect the people who matter most. So, if you have not already bought one, make it a priority and get that cover in place.