Term Insurance Plans for Young Indians: Simple, Affordable, and Digitally Accessible
Let's take a look at why term and life insurance are integral for young Indians, how it works, and how to pick the best plan as per your needs
As India's economy grows fast, young people are getting smarter about money and want to make sure they're secure in the future. Protecting their loved ones from financial hardships has become a priority. Choosing a life insurance plan is a fundamental step towards safeguarding one’s future.
Among the various options available, term insurance plans are increasingly favoured for their simplicity, affordability and digital convenience. Let's take a look at why term and life insurance are integral for young Indians, how it works, and how to pick the best plan as per your needs.
What are term insurance plans
Term insurance is a kind of life insurance plan that comes with financial coverage for a defined period of time, also known as the policy term. In case of the policyholder’s untimely demise during this term, the nominee receives the sum assured. If the policyholder survives the term, there is usually no payout, making these plans easy and cost-friendly.
The major elements of term insurance plans include the following:
- Complete protection: Term insurance focuses only on life cover, without any savings or investment component.
- Affordable premiums: Since it covers only the risk component, premium rates are relatively lower than some of the other kinds of life insurance plans.
- Flexible terms: Policyholders can opt for the tenure and coverage options as per their unique needs.
- High sum assured: With lower premiums, policyholders can opt for a higher cover at an early age.
- Tax benefits: Premiums paid qualify for deduction under Section 80C and the claim payout is tax-free under Section 10(10D) of the Income Tax Act.
Why young Indians should consider term insurance plans
The following are a few important reasons why you should consider a term insurance plan:
Long-term financial security
Many young Indians begin their careers and start financial planning in their 20s and 30s. Opting for a life insurance plan at this age ensures long-term protection from financial uncertainties.
Lower premium costs
The cost of term insurance plans is significantly lower when purchased at a younger age. For instance, a 25-year-old non-smoking male can secure Rs. 1 crore sum assured for as low as Rs. 500 per month, whereas the same cover can cost twice as much if purchased at age 35.
Easy digital accessibility
Almost every major insurer in India offers the entire journey of selecting, comparing, and buying a term policy online. Young Indians who are tech-savvy can research, compare and buy the best life insurance plan in just a few clicks. Policy documentation, premium payment, and even claims are managed digitally.
Flexible and customisable cover
Term insurance offers the flexibility to select riders like critical illness, accidental death, or waiver of premium. These add-on benefits provide a comprehensive safety net for policyholders, addressing life’s uncertainties beyond natural demise.
Types of term insurance plans in India
Here are the various types of term insurance plans available in India:
- Level term insurance plan: This is the simplest form, where the sum assured remains constant throughout the policy tenure. It is best suited for young working professionals.
- Increasing term insurance plan: Here, the sum assured increases every year by a predetermined percentage, addressing inflation and growing financial responsibilities.
- Decreasing term insurance plan: The sum assured reduces each year, often matching the decreasing balance of loans like a home loan or education loan. This type is ideal for those seeking cover only against specific liabilities.
- Return of premium term insurance plan: On survival till the end of the term, the premiums paid are returned to the policyholder. While the premiums are higher, it appeals to those who do not want to forego all their paid premiums.
- Convertible term plans: Policyholders have the option to convert these into other life insurance plans like endowment or whole life, as their financial needs evolve.
How to buy term insurance online
Policy documents are now issued instantly, and all information about terms, claim procedures, and exclusions is easily accessible online. The below are the simple steps to follow:
- Compare policies on aggregator portals by looking at claim settlement ratio, premium costs, and inclusions.
- Calculate your ideal cover; financial experts recommend at least 10 to 15 times your annual income or covering future expenses like children’s education and loans.
- Choose suitable riders for critical illness or accidental cover according to your lifestyle and health history.
- Fill in accurate details about income, medical history and lifestyle habits.
- Pay the premium online and submit documents digitally for instant issuance.
Young Indians can also manage existing policies, renewals and claims through mobile apps, making financial protection even more convenient.
Benefits of term insurance for young Indians
Here are a few of the main benefits of getting a term insurance for young Indians:
Financial protection at low cost
Young professionals can avail Rs. 50 lakh to Rs. 1 crore cover for minimal premiums, leaving more room in their budget for other investments like mutual funds or SIPs.
Simplicity and transparency
With no investment components, term insurance plans are easy to understand, with all charges and terms explicitly mentioned in the policy documents.
Adapting to changing needs
Many plans allow you to increase cover on milestones such as marriage, birth of a child, or home purchase.
Peace of mind for your family
A term policy ensures your family’s lifestyle and goals are not derailed by your absence, taking care of EMIs, children’s education and daily needs.
Tax benefits of life insurance plans
Premiums paid towards a life insurance plan are eligible for deduction under Section 80C up to a maximum of Rs. 1.5 lakh per year. Moreover, the death benefit or maturity amount under most pure term insurance plans is exempt from tax under Section 10(10D), provided conditions are met. This dual benefit makes term policies a smart inclusion in your tax-saving basket.
Claims process for term insurance plans
Filing a claim is now a simple and hassle-free digital process. The nominee needs to inform the insurer, submit required documents such as the death certificate and policy details and fill a claim form. Leading insurers often process claims within 30 days of submission, as mandated by the IRDAI.
Conclusion
A good life insurance plan is super important for young Indians. Term insurance plans are a good way to protect your family. If you make good decisions and use the internet, you can protect your family's future and save on taxes. As more people know about it and can get it online, term insurance is becoming a key to money security for young Indians. Pick carefully, start early, and make sure your family is always protected.
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