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Why Must Millennials Start Investing in Life Insurance?
Millennial influence over the globe is rapidly growing. These new-age employees have recently entered the workforce and earned their first paycheck sometime in the last decade. However, in the middle of high spirits and bucket lists, young breadwinners often tend to ignore planning ahead. Preparing for the future is critical to every adult, and life insurance policies are a great way to begin.
Life insurance plans are an excellent way to secure oneself and one’s family from unforeseeable events that may befall without warning. Today, insurers offer a range of options, from a term life insurance plan that can help cover instances of premature demise to a ULIP plan that helps individuals grow wealth as their age progresses while simultaneously covering them in the event they were to pass away.
Here we discuss why millennials must invest in their future through life insurance policies and shed light on some lucrative options, including endowment, term insurance and ULIP insurance, that one can explore.
Why millennials need to invest in Life Insurance
Preparing for uncertainty is the smartest investment one can make, and one of the best ways to do that is by investing in life insurance plans to ensure that your responsibilities are looked after even in your absence. Millennials need to stop waiting around for the right time and start buying policies rightaway.
Here are some of the advantages of investing in life insurance right now:
1. Life insurance is more affordable for millennials
Life insurance plans are disbursed after careful risk assessments, and younger individuals tend to rank higher on parameters used to evaluate the right applicants. As individuals grow older, the odds of developing illnesses becomes higher, and, hence, insurance premiums grow more expensive.
Obtaining policies at a young age can help individuals lock in competitive rates early on. That can be the difference between deciding for and against buying a policy once a certain threshold of age has been crossed and the risk association of an individual has escalated.
Individuals can also avail of tax deductions to the extent of insurance premiums paid under Section 80C of the Income Tax Act, 1961, further incentivising life insurance policies.
2. Life insurance can generate wealth for millennials
Millennials need to understand the need to build wealth from a young age, and life insurance plans can help individuals achieve financial goals and amass savings within their lifetime through products like a ULIP policy,endowment policy or a term insurance policy.
- ULIP Insurance Policy and ULIP Returns
Unit Linked Insurance Policy or ULIP is an integrated plan that bifurcates the insurance premium into payments made towards market-linked investments and life insurance cover for policyholders. Millennials have a higher risk appetite, and ULIP can be a wonderful start to building a diversified investment portfolio through returns comparable to the industry’s best with the added benefit of life coverage.
Tata AIA Life Insurance offers a host of ULIPs to help serve individual needs. Visit us to explore options that suit you best.
ULIPs offer a high degree of flexibility, including the ability to select investments your payments will be linked to and the tenure for which you have to make payments. As ULIPs are market-linked and, hence, are medium to high-risk investment options, and consumers must evaluate policies against their risk appetite to opt for options that match their expectations and risk tolerance.
- Endowment Policy
Endowment policies are insurance plans that offer a lump sum payout to policyholders when the term of the policy expires or in the event of the death of the holder. Endowment plans are an attractive choice for people looking at long term investment options and come coupled with an insurance policy that covers loss of life.
Endowment policies offer a low-risk opportunity to invest money for achieving financial targets in the distant future, essentially making it a good addition to an individual’s savings portfolio. Funds invested over the life of holders can easily become significant sums in the future.
Endowment policy plans offer flexible payment frequency choices and even additional coverage options allowing the policy to be extended through riders for disability, terminal diseases and more.
- Term Insurance Policy
Term insurance plans are perfect for offering pure life cover without the frills of savings or investments. Term life plans offer a high sum assured at affordable premiums. However, there are no survival/maturity benefits associated with these plans.
Millennials who wish to buy life cover only for the sake of pure life cover can opt for term plans. They cover the life assured and ensure a lump sum death benefit is paid to the nominee in case of the life assured’s demise. Term plans are perfect if you want to buy a cost-effective policy and use other non-insurance products for investment and savings.
Furthermore, insurance premiums are a tax-deductible expense under the provisions of Section 80C of the Income Tax Act, 1961. Notably, sums received towards maturity or death payout also qualify for tax benefits under Section 10(10D) of the Act, subject to prevailing conditions.
Young and healthy individuals usually do not trouble themselves with thoughts of a future without them. However, it is important to consider what happens to people who depend on you, especially in the case of sole bread earners. Safeguarding a future where you are not present is important to ensure the wellbeing of people relying on your efforts.
Individuals that have acquired debt towards their home, business or vehicle must keep in mind that the debt is a liability, and in the face of adversity, their successors must not be deprived of the conveniences that prevailed during their lifetime. Life insurance policies ensure that your family does not face fiscal hardships in the event of misfortune were to take you away.
Millennials are transforming the insurance industry with the advent of large scale technology adoption and financial inclusions, plans tailored for the young of today. Millennials need to inculcate insurance and financial market awareness in order to understand the importance of insurance policies and the need to protect themselves and their families contingencies.
