Which insurance policy will be better at the age of 22?

Introduction

“You don’t buy life insurance because you are going to die, but because those you love are going to live.” ~ anonymous.

Can you expect your mother (40s) to be as enthusiastic at work or home as you are in your 20’s? No, right. It is where age works in favor of a variety of things. In your twenties, you are a young soul who holds the capacity to work two to three times more than those in their late thirties or forties. 

Financial advisors always say that buying insurance in the twenties is the right age because the premiums seem to be more cost-effective. Investing in insurance at a younger age is equivalent to reaping higher benefits later. 

Note: Never forget that the premiums shall remain the same from the time you purchase the plan, and it doesn’t get influenced by ongoing years or changes in your income. 

Moreover, buying insurance is not only for the sake of marriage, children, or parents; it is a healthy practice that one must exercise in order to keep their loved ones financially secure and leave a legacy that they can be thankful for. 

The thought of financial backup should always remain in your mind when you begin to earn and spend because life doesn’t always go smoothly. It is a bumpy road, and one must always be prepared to tackle the situation rather than fall into debt clutches. 

The sooner you understand the importance of insurance in your life, the better you are prepared to take on the challenges that life shall throw at you. 

This blog will help you in understanding,

  • What is life insurance and its importance?
  • What are the different types of insurance?
  • Which is the best life insurance for a 22-year-old?

What is Life Insurance?

Life insurance can be defined as a mutual contract between the life insured/policyholder and the insurance company where the life insured guarantees to pay the insurance provider with a certain premium (based on the chosen insurance plan). In return, the company assures to deliver the beneficiary/nominee with a death benefit if the insured meets with death when the plan is active. Now the payment could be made in any length of time. 

However, if the life insured manages to sail through the duration of the plan, then they are eligible to avail of the maturity benefit. 

Now, life insurance can widely be bifurcated into two divisions, and they are:

  • Pure Life Insurance 
  • Savings and Protection Plan

Why is Life Insurance Important?

In our country, the overall penetration of life insurance is 2.76%. Though it looks like a modest number, many aren’t aware of insurance and its perks.

You might be learned, and your parents own an insurance policy; even though you aren’t a payer of the premium, you are aware of the term insurance and its use case. However, thousands of people in India aren’t mindful of insurance and benefits that come in handy with the tool. 

Due to a lack of insurance-related knowledge and awareness about it, they aren’t aware of the insurance schemes, but what about you? Ignorance is bliss, but that motto is not applicable here because this ignorant act can cost you your savings and loss of peace for your loved ones. 

Life is an uncertain road, and insurance acts as a monetary cushion to support your family in your absence. Buying a life insurance is important because,

Managing Debts: Life insurance acts as a savior in disguise as it can assist your family in repaying the debts without taking much emotional stress and anxiety. 

Let us suppose, you took a home loan of 25 lakhs. You successfully repaid half of the loan but wasn’t able to pay the rest as you met with an untimely death. Have you ever wondered how your family will sort out your debt clutter after you are gone? 

Supports your Long-Term Objectives: One’s list of dreams never minimizes. There is no need to cut it short because insurance is a safety pillar that will help you with wise investments that will help the life insured reap better and more extensive benefits. 

 If you desire to have a business, send your child abroad for higher studies, want to roam the world at old age, and many more. 

Wealth Creation: Having a robust financial backup has become a mandate because twists and turns in life don’t come with prior invitation. If you already have a soaked monetary reserve it helps you to tackle through the payable odds of life. Therefore, insurance helps the life insured to save and weave a substantial corpus for the future and increase it.

Want to Save Taxes? If yes, then a worthy answer is ‘go for insurance.’ Under Section 80(C), 80 CCD (1), 80CCC, 10 (10A) (iii), 10 (10D) of the Income Tax Act, 1961, the life insured have the chance to save taxes for the premiums they pay and the benefits they receive. However, they are liable to change based on any tax-related legislation.

Stress-Free Retirement Time: Do you want to work till your 60 and still weep that you don’t have enough money to lay back and enjoy your hard-earned money? If not, then having insurance (retirement plan) can be a healthy deal because it will help you take countless sighs of relief in your retirement phase as you don’t have to yield in front of anyone for money.

Health Guardian: For instance, if you are diagnosed with cancer, do you have enough money to pursue full-fledged cancer treatment? Will your bank account be able to handle the pricey deal? It is difficult to say a yes because cancer treatment in India can cost over 30-35 lakhs, and not everyone can have this much in their account. Buying a critical illness insurance plan will act as an aid to cover your hospital-related expenditure. 

Different Types of Insurances

There are different types of insurances available in the insurance market in India, and they are as follows:

Life insurance is a massive tree with multiple branches and bears different fruits. Different types of life insurances are as follows:

  1. Term insurance: It is one of the most bought life insurance because it comes with certain years and has many other benefits. They provide complete risk protection against any form of unforeseen occurrence. 
  2. Whole Life Insurance Plan: This type of life insurance covers a century. 
  3. Money-Back Insurance: This type of life insurance plan allows the life insured to avail of the ROI and other benefits in a periodic manner.
  4. Endowment Life Insurance: This type of life insurance is also known as a savings plan. It comes with a dual purpose: both insurance and savings. 
  5. Retirement Insurance Plan: This type of policy will help you create a corpus for your retirement to lead to a happy old age.
  6. Unit Linked Insurance Plan (ULIP): If you are one of those who loves taking up market risk and reaping benefits, then this is the perfect investment plan for them, and they also provide insurance services. 
  7. Health Insurance: As the name implies, this type of insurance shall help you cover the hospital expenses and turns out to be a plus point as it saves your hard-earned money from getting exhausted over hospital expenditure.
  8. Child Insurance Plan: Want to safeguard your child’s future? Then this is the ultimate plan because it will cater to all the worthy needs of your child without letting them compromise on their lifestyle or aspirations. 

Which is the Best Life Insurance For a 22-year-old?

The best life insurance that a 22-year-old can pick for themselves is term insurance, and one of the best and most reliable terms plans that a young earning soul can own is, 

Aditya Birla Sun Life Insurance DigiShield Plan

In this Sabka Vala Term Plan, there are 10 options, and they are as follows:

Plan Option 1: Level Cover Option

Plan Option 2: Increasing Cover Option

Plan Option 3: Sum Assured Reduction Option

Plan Option 4: Whole Life Option (Level Cover)

Plan Option 5: Whole Life Option (Sum Assured Reduction Cover)

Plan Option 6: Income Benefit

Plan Option 7: Level Cover plus Income Benefit

Plan Option 8: Low Cover Option

Plan Option 9: Level Cover with Survival Benefit

Plan Option 10: Return of Premium (ROP)

Some of the characteristics of this term plan by the ABSLI are as follows:

  • If you think you shall get through a century in your life, then this is a qualified plan as it offers an extensive coverage up to the age of 100. You can enroll yourself in this plan at the right age and enjoy the plan as per the selected option and the riders. 
  • The death benefits are paid monthly installments and lump sums in this plan. As opted by the life insured at the inception of the insurance plan. 
  • If you manage the term plan, pay the premiums on time, and reach the age of 60 without any buffer, you are eligible to avail of monthly survival benefits. This benefit also acts as a relief during your retirement period. 
  • Terminal Illness Benefit: Under this perk, if the life insured is diagnosed with a terminal illness when the term plan is active (and you are below the age of 80), then the life insured can avail of this benefit, where 50% of the applicable sum assured of death, subjected to a maximum of Rs. 2 crores, will be paid as a lump sum. Moreover, the future premiums shall be annulled.

To know more about this complete plan, click – ABSLI DigiShield Plan.

Conclusion

Life insurance is a worthy asset that a youngster should invest in a suitable plan at the right time. Though they can’t support you emotionally, the insurance shall always have your back when you or your loved ones are hovered by economic tensions. 

It is why choosing the affordable plan from the right insurance company is essential because you would not want to meddle with the quality of comfort for your family. For more details on life insurance and better plans visit ABSLI Website

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