As financial awareness grows, more Indians are realising the importance of safeguarding their financial future through term plans and medical insurance. However, many still delay these crucial decisions, often citing reasons like “I am still young” or “I don’t have any major health issues.” In reality, the best time to secure these protections is during one’s early years. Here’s why:
1. Lower Premiums: Cost-Effective Protection
Insurance premiums are directly linked to age. The younger you are, the lower the risk to insurers, which translates to cheaper premiums. For example, a 25-year-old opting for a ₹1 crore term insurance might pay as little as ₹500-600 per month, whereas a 35-year-old for the same cover could pay almost double.
Similarly, medical insurance is significantly cheaper when purchased early. At 25, you may get a family floater plan for ₹5 lakhs for around ₹8,000-10,000 annually, which can go up to ₹20,000 or more if you wait until your 40s.
2. Healthier and Easier to Insure
When you’re young, you are typically healthier, which means insurers are less likely to deny your application or charge extra for pre-existing conditions. Common issues like diabetes, hypertension, or cholesterol are less frequent, making you a safer bet for insurance companies.
Additionally, medical policies often come with a waiting period for pre-existing conditions (2-4 years). Buying early helps you surpass these waiting periods while you are still healthy, ensuring you get full coverage when you might need it most.
3. Longer Policy Tenure
Purchasing a term plan at a young age allows you to lock in coverage for a longer period—sometimes up to 40-50 years. This ensures that your family remains financially protected throughout your prime earning years and beyond.
In medical insurance, a longer tenure often brings no-claim bonuses, which add to your sum insured without increasing your premium. For example, if you start at 25 and stay healthy, your coverage amount could almost double by the time you reach your 40s, at no extra cost.
4. Financial Security for Family
A term plan provides a safety net for your family in case of your untimely demise. The lump sum payout can help them manage loans, children’s education, and daily expenses without financial strain. Starting early ensures that your dependents are always protected, no matter what life brings.
5. Tax Benefits Under Indian Law
Both term plans and medical insurance offer tax benefits under sections 80C and 80D of the Income Tax Act, respectively.
- Term plan premiums are eligible for deductions up to ₹1.5 lakh per annum under Section 80C.
- Health insurance premiums offer deductions up to ₹25,000 (self and family) and an additional ₹25,000 if covering senior citizen parents under Section 80D.
6. Riders for Enhanced Protection
Starting early allows you to explore various riders like:
- Critical Illness Rider: Provides a lump sum if diagnosed with severe illnesses like cancer or heart disease.
- Accidental Death Benefit: An additional sum assured if death occurs due to an accident.
- Waiver of Premium: Future premiums are waived if you become disabled or critically ill.
These riders are cost-effective when added early, as premiums remain consistent even as risk increases with age.
7. Peace of Mind and Financial Discipline
One of the less quantifiable but crucial benefits of buying insurance early is peace of mind. Knowing that your loved ones are financially secure, and medical emergencies are covered, lets you focus on wealth creation and life goals without constant worry.
Moreover, committing to regular premiums instils financial discipline, encouraging you to save and plan better.
Conclusion
Taking a term plan and medical insurance in your early 20s or 30s is not just a financial decision—it’s a commitment to safeguarding your family’s future and your own health. As life expectancy increases and healthcare costs skyrocket in India, the decision to protect oneself early is both wise and economically sound.
Invest in your peace of mind and secure your family’s future today—because the best time to buy insurance was yesterday; the next best time is now.
Dr. Irshad Ahmod Khan
Sub-Editor
