Why Should You Purchase Term Insurance With the First Pay?
Updated On Jul 31, 2021
Table of Contents
The term insurance has gained huge popularity and becomes a preferred choice lately. Different term insurance premium calculators are available online that can help you compute the sum assured as per your needs. The term insurance provides a death benefit in case the policyholder dies during the policy term. If you are searching for a policy that provides financial security and stability to your loved ones in your absence, then a term insurance plan pops up as being the best solution. But, why is it advised to start at the earliest?
Why Purchase Term Insurance With Your First Pay?
No matter how good a term insurance plan is that you have searched for, it is always recommended to start early. What could be the best time than your first salary when you become financially independent? Here are some points due to which you are suggested to buy a term insurance plan with the first salary:
- Secures the Future - When someone starts earning, responsibilities do come along irrespective of his or her marital status. With the term insurance plan, you can plan your future as per your requirements and in case of a policyholder’s death, the payout from the insurance company can ensure security for your family from financial hardships.
- Financial Security - The death of a family's earning member, specifically the breadwinner, can turn the fate of the family upside down, making it extremely tough to manage daily expenses. A term insurance policy offers a sum assured in the case of the policyholder’s demise to help his or her family recover from financial trouble and meet all their financial obligations easily.
- Financial Discipline - Take the first step towards financial discipline with the purchase of a term plan. Your first salary could help you make this investment in the best manner as initiating early can help you gain great benefits later. Develop a healthy habit of investing in a term plan based on your requirements and budget. Buying the term plan early will allow you to pay a lower premium for decades to come.
- Cost-Effective - A term policy is one of the most cost-effective plans. This is the most economical way to shield a family in case the breadwinner dies. Anyone between the age of 18 to 65 years can easily buy the term plan and can avail of it by just paying the premium on time. If you buy a term insurance plan early in life like with your first salary pay, it will make you pay a lesser premium making the plan more affordable.
- Tax Planning - Being an earning member of a family, you need to think about the taxes too. With your first salary, you might have to start filing taxes and make payment of a part of your pay. A term insurance policy is a tax exempted instrument with which you enjoy tax benefits. You can get Rs 1.5 lakh as tax exemption as per section 80C of the Income Tax Act, while the death benefit amount is tax-free under Section 10 (10D).
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.