Life insurance is often associated with older individuals who have dependents and financial responsibilities. However, millennials also need to consider the importance of life insurance. While the twenties and thirties are typically a time for adventure and exploration, it is also a crucial period to start planning for the future and taking on responsibilities.
Insurance acts as a risk management tool, providing financial support and protection against unforeseen circumstances. Starting an online life insurance policy in your twenties can offer numerous benefits and provide security for your future self and your family.
The Types of Insurance Available
There are several types of insurance policies available that cater to different needs and goals. These include:
Life Insurance: Life insurance secures your family’s financial future in the event of your untimely death. It provides a sum insured to your beneficiaries, ensuring their financial stability after you are gone. Life insurance policies can also help you achieve various financial goals such as buying a house, funding your child’s education, or planning for retirement.
Health Insurance: With the rising cost of healthcare, health insurance has become essential. It provides coverage for medical expenses, including hospitalisation costs, doctor visits, surgeries, and medications. Health insurance ensures that you receive quality medical care without depleting your savings.
Child Insurance: Insuring your child’s education is now possible with reliable insurance companies offering plans specifically designed to cover educational expenses. These plans ensure that you can save enough money to provide the best education for your child.
Retirement Insurance: Early retirement is becoming increasingly popular among millennials. Retirement plans offer financial support to help you achieve this goal by creating a corpus over time that can sustain your lifestyle during retirement.
The Benefits of Life Insurance
Let’s dive deeper into the benefits of life insurance, one of the most crucial insurance policies for millennials.
Financial Security for Your Loved Ones: Life insurance provides a safety net for your family in the event of your untimely demise. It ensures that they are financially secure and can continue to meet their financial obligations, such as mortgage payments, education expenses, and daily living costs.
Coverage at a Lower Cost: One significant advantage of taking out an online life insurance policy at a young age is the ability to secure coverage at a lower cost. Younger individuals generally have better health and fewer pre-existing conditions, making them eligible for lower premiums. As you age, the cost of insurance increases due to the higher risk associated with age-related health issues.
Wealth Creation: Life insurance policies like endowment plans and unit-linked insurance plans (ULIPs) offer not only protection but also an opportunity to create wealth over time. These policies combine investment and insurance components, allowing you to grow your savings while ensuring financial security.
Tax Benefits: Life insurance policies also offer tax benefits under Section 80C of the Income Tax Act. The premiums paid towards life insurance are eligible for tax deductions up to Rs 1.5 lakh per annum. Additionally, the sum assured received by your beneficiaries is tax-free under Section 10(10D) of the Income Tax Act.
How Much Life Insurance Do Millennials Need?
Determining the right amount of life insurance coverage depends on various factors such as your financial goals, current expenses, outstanding debts, and future obligations. To calculate an estimate of your life insurance coverage needs, consider the following:
Income Replacement: Calculate how much income would be required to replace your earnings if something were to happen to you. Consider factors such as inflation and future financial goals.
Outstanding Debts: Take into account any outstanding debts, such as mortgages, car loans, or student loans.
Education Expenses: Estimate the amount required to fund your child’s education based on current educational costs and inflation.
Funeral and Final Expenses: Consider the expenses associated with your funeral and final arrangements.
Securing Your Dream Home
If you are a millennial planning to purchase your dream home in the next few years and need a loan of Rs 50 lakh to buy the house. To secure this loan, you will need to show proof of an adequate life insurance policy that can cover the outstanding amount in case of your untimely demise.
By opting for an online life insurance policy with a sum assured of Rs 50 lakh, you can ensure that your loved ones will be burdened with the loan repayment if something were to happen to you.
Protecting Your Family’s Financial Stability
Consider a scenario where you are married and have a young child. As the primary breadwinner, your income supports your family’s lifestyle and covers daily living expenses. In the unfortunate event of your passing, your spouse and child would face financial hardship without proper insurance coverage.
To protect their financial stability, you opt for an online life insurance policy. If you estimate that an annual income of Rs 10 lakh is required to meet their expenses, you should consider a policy with a sum assured of Rs 1 crore. This coverage ensures that your family can maintain their standard of living and meet their financial obligations even in your absence.
Conclusion
As a millennial, it is essential to consider the benefits of life insurance and the role it plays in securing your financial future and protecting your loved ones. An online life insurance policy offers various advantages, including financial security for your family, lower premiums, wealth creation opportunities, and tax benefits. Start planning early and make an informed decision for a financially secure future.
**’The opinions expressed in the article are solely the author’s and don’t reflect the opinions or beliefs of the portal’**
