Best term life insurance for young adults: What you need to know

In our unpredictable world, buying term life insurance as soon as possible is a wise decision. It is a major financial instrument that ensures the financial safety of your loved ones in the event of your untimely death. If you are a young adult, planning on investing in a term life insurance, go through the entirety of this page to learn more on this topic so you can make a well-informed choice.

What is the need for term life insurance?

There are tons of reasons why young adults should invest in a term life insurance plan, such as;

It helps protect your loved ones financially in your absence. This way they can cope with financial obligations without facing any issues.
Depending on the type of plan you pick, you get to choose riders/add-ons for an extra cost, letting you meet your coverage wants.
It protects your loved ones from uncertainties and gives you peace of mind.
Term life insurance offers a huge sum assured in exchange for low premium rates, making it an affordable investment for your family.

Why should young adults invest in term life insurance?

Anyone meeting the general criteria can invest in a term insurance plan. Here are some instances why young adults should invest in a term life insurance plan;

Young adults who are newly married: It is ideal for newly married couples to plan for their future finances in advance. So, investing in a term plan is imperative in such a scenario, and if one is young, one can get good coverage at low premium rates.
Young adults who are parents: Young adults who have become parents or are planning on being one can secure their child’s future in their absence from the get-go with a term plan in this world of uncertainties.
Young adults who are the sole breadwinner in the family: If you have family member’s dependent on your sole income, you should protect them financially with a term plan so they can cope with financial obligations in your absence.
Young adults who are paying taxes: By investing in term life insurance, you not only get financial security but also enjoy various tax benefits. So, it is a win-win situation for young adults.

Types of term insurance

Before finding out the best term life insurance plan for young adults, it is essential to learn about the different types of term plans available. Here are the four main types;

1. Standard term plan

These types of plans are the simplest form of term life insurance, where the policyholder pays a premium throughout the premium-paying tenure of the plan, keeping it in action. So, if the life assured tragically passes away within the policy tenure, the beneficiary will receive the pre-determined sum assured amount as a death benefit.

2. Increasing term plan

In this type, the plan’s sum assured increases by a certain percentage or amount every year while the premium stays the same. For example, if you purchase an increasing term plan with a sum assured of INR 60 lakhs with a 5% annual rate of increment of the sum assured, the sum assured the following year will become INR 60,30,000. This increment can happen every year until it reaches a certain upper limit, such as INR 1 crore.

3. Decreasing term plan

In contrast to the increasing term plan, the decreasing term plan features a sum assured that gets smaller over time at a fixed rate. In this case, too, the premium stays constant and the term usually ranges between a year and 30 years.

4. TROP

A term insurance with a return of premium or TROP is a plan that features maturity benefit in case the life assured survives the policy term. In that scenario, the premium paid for the plan (minus standard deductions) is refunded upon the maturity of the policy. On the other hand, if the policyholder dies within the plan tenure, the usual sum assured is offered as a death benefit to the beneficiary.

How to find the best term life insurance for young adults?

The best term life insurance for young adults depends on the specific needs and circumstances of an individual. So, in order to find the best plan, you need to assess your financial wants and liabilities and check whether;

The overall cover amount satisfies your financial obligations.
The plan cost is within your budget.
There is the availability of riders/add-ons that you want.
The insurer has a good claim settlement and solvency ratio.

To give you a general idea, in our world of uncertainties and rising inflation, having a term plan with a huge sum assured is essential in future-proofing your loved ones’ financial security. A popular example of such a plan that young adults can consider is the 1 crore term insurance, which offers INR 1 crore death benefit at reasonable premium rates. The payout under the 1 crore term insurance plan should allow the beneficiary to handle any existing or upcoming financial obligations, and carry on maintaining their lifestyle in most Indian households.

Conclusion:

The best term life insurance plan is obviously the one that meets one’s financial requirements and expectations within an ideal budget. A 1 crore term insurance plan is an option that is quite popular among young adults for its massive sum assured which helps to future-proof the family’s financial security in their absence.