Introduction:
Human life is a frail, unpredictable thing. We are constantly surrounded by uncertainties that endanger our lives no matter how shielded we stay. But it is also human nature to try and minimize the likelihood of such events, or at the very least, try to prune down the crippling effect that the loss of life can have on others.
Life insurance is an arrangement through which you make provisions for the unpredictable nature of life regarding financial protection. It is a contract between the policyholder and the insurance company, where the life insurance company pays a specific sum to the insured individual’s family upon his death. The life insurance sum is paid in exchange for a specific amount of premium.
The question, then, arises – what is the best age to start planning for an alife insurance policy? No one is immune to health scares, sudden death, or accident. These eventualities can strike anyone’s door without prior notice, irrespective of age. Therefore, the common and wise response to this question would be that life insurance should be bought as soon as you start earning. A few things to consider in respect of the aging conundrum are discussed below.
For starters, life insurance policies are often aimed at helping your dependents, who are mentioned as the policy’s beneficiaries. Therefore, it would make sense to buy a life insurance policy only when you have dependents. This is true, except that there are instances where life insurance can be beneficial even if you have no dependents. Life insurance policies available today could be directed at other goals beyond just providing for the family in your absence, and these goals could include wealth creation, asset protection, critical illness coverage, or paying off debt. If you have a home loan or plan to send your child overseas for higher education or build that farmhouse post-retirement, life insurance will come in handy for all your financial needs.
Thus, the rule of thumb may be that you buy life insurance when someone depends on your income, regardless of age. Still, as a generalization, your 20s are a good time to embark on this journey, but you should definitely enter your 30s with a life insurance hand. Whatever drives the need, term insurance or any other non-traditional life insurance product is a comfortable financial cushion to fall back on.
Additionally, age can also influence the terms of the life insurance policy. Age is one of the critical factors determining the premium you will pay under an alife insurance policy. The rule of thumb here is that the younger and healthier you are, the less expensive it is.
This is because, as you age, the likelihood that an insurer will have to pay out on your policy increases since aging makes us more susceptible to health concerns, more vulnerable catastrophic accidents, and the like. This is why between a 44-year-old and a 29-year-old, the former will pay more premium on the same policy even if they are in the absolute same condition in all other respects. Buying young also makes the process a lot smoother, as against buying when you’re older, which would entail undergoing more tests and medical check-ups demanded by the insurer.
Further, it is also a good idea to buy term insurance early because of the tax benefits it accords. Tax deduction under Section 80C of the Income Tax Act, 1961 allows exemption up to Rs.1.5 lakh per annum.
Lastly, you can start planning for life insurance early and even get on board the policy, but you should revisit the policy now and then to align it with the current scenario in your life.
