While a young college student, purchasing a term insurance policy or a money back policy can be the last thing on your mind as you focus on your studies. Getting a term insurance policy is something that most folks do, but things have changed.
What is Term Insurance?
If you’re wondering what term insurance is, we’re here to assist. Simply defined, term life insurance is an agreement between the policyholder (insured) and the insurance company in which, in the event of the policyholder’s untimely death, the insurance company pays a predetermined amount to the insured person’s family. When it comes to long-term financial planning, a term plan is one of the best investment plans.
When determining what term insurance is, it is critical to realize that term insurance is the purest kind of life insurance coverage that provides full financial protection to your family members from life’s uncertainties.
Your family will get life insurance or a sum guaranteed based on the term insurance plan you choose in the event of your untimely death during the policy period. Please tell us more about term insurance and the many features and advantages it provides.
Having a policy is renowned for more than simply life insurance; it is also known for wealth development, with alternatives such as a Unit-Linked Insurance Plan (ULIP) and a money back policy. Let’s take a look at five reasons why you should get the best investment plan while you’re still in college:
1. Grants Lower Premiums
The premium rate you must pay to get term insurance coverage is much lower when you are young. When compared to the premium you would have to pay in your late twenties or early thirties, the cost grows tremendously. If you get the best investment plan as a college student, you will have less money to invest and receive a life cover that will provide for your family.
2. Provides a Life Cover
When you get a term insurance policy or money back policy, you are purchasing life insurance coverage in the event that anything were to happen to you. Your recipient may benefit from this coverage by receiving a lump sum payment to secure their future and financial requirements. You may choose the quantity of the sum promised while keeping specific circumstances in mind to grasp the needed money.
3. Fulfills Wealth Creation Goals
An insurance policy is more than simply a way to acquire coverage; it may also be utilized to build long-term wealth. You may do this by using the best investment plans such as a money back policy, ULIP, endowment plan, and so on. After the insurance term finishes, you will get a maturity amount.
A ULIP has an investing component in which you may choose to invest in equities or debt based on your risk tolerance. A money back policy pays out regularly every five years of the insurance term and provides maturity advantages. Such arrangements allow you to save money while paying off obligations such as college loans.
4. Gives Tax Benefits
You may start claiming income tax deductions to get tax breaks when you start earning money. The premiums paid to get insurance coverage may be claimed for tax exemption under Section 80C. This reduces your taxable income and is useful when you are just starting out as a new employee with a lesser wage.
You may also get tax breaks with a money back policy, which can help you save money on your taxes. Section 80C of the Income Tax Act of 1961 allows you to deduct up to Rs.1.5 lakh in term insurance premiums. Not only that, but if you choose critical illness coverage, you may also get tax breaks up to Rs. 25,000 under Section 80D.
5. Helps in Planning for the Future
Whatever your future goals are, whether it’s a marriage and children or additional education, buying term insurance as a college student may help you make them a reality. With the best investment plan, you know your family will not be left to fend for themselves, even whether it is your spouse or an education debt taken out by your parents on your behalf. You may use a money back policy to plan your future and determine what kind of term insurance you will need.
When does a College Student Need Term Insurance?
Contrary to common assumptions, obtaining term insurance as a college student makes little sense. There are several scenarios in which term insurance can definitely benefit you, even while you are in college.
1. If you have a Student Loan
Student loans, also known as Education Loans in India, are loans that you may take as a student to pay for your higher education, generally with the help of a co-applicant. Student loans have lower interest rates than conventional ‘Personal’ loans.
What if you die in the middle of your schooling, and there is still a large portion of your debt to be paid? Your co-applicant will bear the whole burden.
However, if you have a term insurance policy, the amount guaranteed may be utilized to pay off all of your loans and obligations.
2. If you have Dependents
Many people opt to marry while still completing their higher education. In addition, some students begin their higher education later than others. If you fall into any of the following categories, you should think about getting term insurance coverage.
It will take care of your spouse since the money collected may be utilized to cover burial and other one-time expenses. If you have a kid, he may use the funds to help pay for his school.
3. To Support your Parents
Our parents put forth all the effort to ensure that we have a pleasant and stress-free existence.
As we become older, it becomes our obligation to look after them. But what if you die suddenly and are unable to provide for them?
Wrapping It Up
With these five factors in mind, you should be able to determine whether or not you should get term insurance or a money back policy as a college student. With the advantage of age on your side, you are preparing ahead of time so that you can enjoy the rewards later. However, if you wait until you have a secure career and a family, it will be too late. This is why you should buy insurance as soon as possible in your life.