As a nation we are undergoing dynamic changes. With an average age of about 30, the youth is in high spirits and has been doing well in all walks of life. Consumerism is thriving; thanks to the improved income levels which has resulted in an enhanced lifestyle. In fact, last decade itself witnessed a huge cultural and lifestyle shift, across all age groups.
Life insurance is not just a cover for family; it is primarily a cover for you or the buyer. Let us see how:
Life insurance pays in the longer run
Yes, life insurance is taken as a product to cover families against the risk of losing the bread earner. But the other aspect of it is that it offers a huge respite if the buyer remains single and lives longer. With improving health care facilities, longevity has gone up, making it prudent to save funds to meet post-retirement expenses and maintain an unchanged life style.
The trend of early retirement is also catching up which makes it all the more important to stay invested with discipline as life indeed is long and eventful. Risks like critical illness at a tender age of 60-70 also need to be factored. As a youngster, one doesn't pay much attention to this but a smarter move is to have a corpus allotted for medical emergencies too.
A good endowment or a money-back policy purchased at a younger age will start taking care of your milestone expenses at the later stage of life. These are different from traditional pension products.
Cost of insurance goes up as you grow old: You may miss out an opportunity of availing larger cover at a lesser premium if you opt for insurance after you have acquired liabilities such as car or home; and have dependents. Also, the belief that coverage should be bought only when you have dependents, adds to the difficulty of buying a policy later.
When you are young - say less than 30 years of age - cost of life insurance cover or a critical illness cover would be very less in comparison to what you will get at the age of 40.
It is wiser to opt for a cover at a younger age and increase it gradually with growing liabilities and responsibilities at different stages of life.
Avail tax benefits
Life insurance instruments fall under the tax saving bracket, then why not take advantage of it and save money? Call it compulsive saving but it proves to be hugely beneficial at a later stage. It is easier to save money during early years as there are not many liabilities.
Also, as someone who has no dependents, you may still have financial obligations, in the form of mortgage, home, student loan etc to meet. A life cover will become helpful in meeting financial obligations in an event when you are unable to work due to unforeseen circumstances. All in all, having a life cover is a practical decision which gives best results when done early.
We all cherish our heydays but must not forget to make arrangements for our grey days.
(Amit Kumar Roy is the Chief Distribution Officer with AEGON Religare Life Insurance)