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10 Reasons to Buy Insurance in Young Age

Lena Burkut Lena Burkut , 3/21/2018
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If you’re in your early twenties and without any dependents, you might believe life insurance is not something that you would need you right now. Many people believe buying life insurance in their twenties is not at all important. They feel it is one way to expand their investment portfolios and start saving money. People think that insurance is only important after getting married when in the thirties.

But the fact is that life insurance needs to be bought when young to save on a lot of money. The younger you are when buying an insurance policy, the less you’ll have to pay later. Age is one of the biggest components that determine the low premium for buying life insurance.

Top 10 Reasons Why One Should Buy Insurance at a Young Age

1.  Pay a Lower Premium
If you buy life insurance at a young age, you are bound to enjoy lower premiums that when you opt for insurance at an older age. Some companies charge people in their forties twice as much as a young man in twenties.

If you face a health condition when older, the monthly premiums will be higher, and one would end up paying much higher life insurance premium. A level premium term policy costs high as term insurance, but the premium would always be the same for the time period you’re under coverage. A life insurance policy offers fixed premium and also includes an increase in cash value over time.

2.  Support for Others
Many people in their twenties are known to support their family, especially aging parents. Many parents reside with their young children. One might want to support their loved ones by financial means and even with a strong financial safety net too. A renewable term insurance policy for every year could work well since it requires a lower premium and can be renewed every year with the premium going up marginally every year.

3.  Outstanding Loans
With a high student loan debt, or sometimes a home mortgage, youngsters need to sort things with loved ones before their absence leads to the hefty amount of debt. A term life insurance policy with coverage for a specific timeframe of the mortgage or student loans can help relieve financial burdens of your family in case of a mishap.

4.  Charitable Options
If one is keen on a specific cause then opting for a life insurance is an easy and costless way to leave money with a charitable rider for the same.These riders do not affect cash value of the policy but one should name a charitable organization.  Consult an expert tax consultant expert to know if this charitable initiative helps you save tax on a yearly basis.

5.  Saving Money
With an insurance policy, you’re also encouraging yourself to save money especially by shelling out money for policy premiums. One can pay their premium on a periodic basis or all at a lump sum at a certain time, while also allowing a change in death benefit amount. Some universal life insurance policies include some savings to provide significant cash value. Leverage interest that is being accumulated to pay for premiums.

6.  Deal with Debt
Don’t let your family to deal with debts and financial liabilities especially when you hit a crisis. Any outstanding debt in the form of a home loan or a personal loan could be taken care of, with the right life insurance policy.

7.  Achieve Long-Term Goals

With insurance, people can remain invested for the long-term and even work to achieve long-term goals like investing in a home or set a retirement corpus. With diverse investment options, one can choose policies that suit your predicament and financial situation. Some policies include investment products that are connected to fund performance. But one should be aware of potential risks and returns before opting such a policy.

8.  Ensure Your Business Works Smoothly
Life insurance does not take care of people and their family but some insurance policies also ensure your business runs smoothly come what may. If you own a business, one can ensure that the business partner purchases your portion and gets into a buy-sell agreement with the payout sent to deceased partner's nominees. One can avail a term insurance policy and a life insurance policy for the business.

9.  Tax Saving Ideas
One can save taxes with respective insurance policies and with every premium, one gets eligible for maximum tax benefit and also tax-free proceeds in the event of death/maturity. One should opt for particular life insurance policies that include tax-saving benefits to save on taxes annually.

10.  Peace of Mind
Since death is unavoidable, one should always opt for life insurance so that in the face of tragedy, at least your family is financially secured. Even a small policy can help your family to get over difficult times. Having a life insurance also ensures that there is peace of mind always.

Life insurance acts as a great tool for people to include protection as well as savings in a disciplined manner, thus creating a good corpus in the end. One might opt for life insurance to save on taxes while some might want to secure the financial needs of the family. In any case, buying insurance at a young age is crucial in many ways.