Are you an Indian millennial?
In that case, you were exposed to unique financial challenges, whether it’s the recession of 2008 or the recent COVID-19. So, you must be prepared for the next unexpected turn that your life may take.
In a world of uncertainty, millennials often find themselves unprotected from harsh realities. Hence, an adequate financial safety net is needed to protect loved ones from all the troubles.
In this regard, a millennial life insurance plan offers you financial protection that you are looking for. So, let’s dive in and understand the importance of a life insurance plan, its sub-types and how to find the best one.
Why is Life Insurance Planning for Millennials Important in Today’s World?
Tomorrow is not guaranteed, and any unforeseen turn of events can put you and your loved one in severe financial trouble. But, you can remain worry-free with a potent millennial life insurance. So, here are the reasons why investing in life insurance is of utmost importance:
Provides Financial Security
The biggest reason to invest in life insurance is to ensure future financial protection. The policy offers you different avenues of return that will ultimately ensure your financial well-being. For instance, if you purchase a life insurance plan in the form of a pension plan, you will get a monthly pension upon surviving the term and crossing the retirement age mentioned in the policy.
On the other hand, simple life insurance will include death benefits and a lump sum return upon maturity.
Helps in Wealth Creation
The next reason why millennial life insurance makes sense is that it helps create wealth. To clarify, the investment you make in a life insurance plan grows over time and at the end of the tenure, you receive the total investment back with a handsome return. Now, it is essential to note that the concept of death benefit is different.
For example, you have decided to opt for a ULIP, which comes with insurance and investment options. A portion of the amount you invest here will go directly into market-related instruments for investment. It means you stand a chance to make a substantial return from it.
Also, if you can combine life insurance with other investment options, it accelerates your wealth creation process.
Brings Peace of Mind
The next point that needs mentioning regarding life insurance benefits for millennials is that it brings peace of mind with it. Once you have the financial safety net of a life insurance plan, you can remain worry-free. The financial needs of your loved ones are taken care of, and you have invested carefully, which will bring excellent returns over time.
Earn Income Tax Benefits
As per the income tax regulations of India, the premium you pay for a life insurance plan receives tax exemption. For instance, in Section 80C, you can secure a deduction of up to Rs.1.5 lakh on payment of insurance premiums.
Apart from that, there are additional income tax benefits available on life insurance policies under sections 10(10D), 80CCC, etc. Hence, it helps millennials to save on their taxable income and secure financial protection.
Helps Debt Management
One of the leading life insurance benefits is that it helps in debt management. Since millennials often carry financial commitments like home loans, car loans, student loans, etc., the maturity amount from these policies can help them repay these debts.
These are some of the main reasons behind insurance planning for millennials. However, knowing these is not enough; you also need to be aware of the options you have to make the right call.
Life Insurance Plans for Millennials: Choose the Right One
As a millennial, you have multiple options in terms of life insurance that you can choose from depending on your needs and financial goals. Following are some of the major sub-types of millennial life insurance
- Term Insurance Plans
Term insurance is a simple life insurance plan that offers a substantial death benefit in case of the policyholder’s untimely death. In case the policyholder survives the term, the insurer will return the premium, and these policies are known as Term Plans with Return of Premium (TROP).
- Whole Life Plans
The whole life plans come with an extended tenure that offers almost lifetime coverage. It also generates wealth by offering a return on investment and periodic payout.
- Endowment Plans
Endowment plan is a one-plan-solves-all kind of life insurance policy. It provides financial coverage as well as an avenue to create wealth. Here, you invest for a particular period of time and create a corpus, which you get back with a return as a maturity benefit at the end of the policy term. In case of any unfortunate incident, it will also offer a death benefit.
- Money-back Plans
These plans follow the concept of endowment plans, but they offer periodic payout throughout the tenure, depending on the pre-agreed term. Additionally, in case of the demise of the policyholder, the total maturity amount is paid to the beneficiary irrespective of the periodic payments.
- ULIP
The Unit Linked Insurance Plans combine insurance and investment. Here, a portion of the premium is invested in insurance and the other in investment avenues like stock, bonds, etc.
How to Find the Right Millennial Life Insurance Policy?
Well, only knowing the importance and sub-types of life insurance is not enough. To make the right investment decision, you need to consider a few points. These are:
- Evaluate your financial responsibilities
- Decide the coverage amount
- Read the policy fine print
- Go through the terms and conditions
- Understand the claim process and settlement time
- Assess the reputation of the policy providers
- Compare different policies and find affordable life insurance
Millennial life insurance is not just about securing the financial future of your loved ones; it plays a broader role. It can be an excellent investment, as well as a debt management and tax-saving option. All in all, life insurance for millennials comes across as a tool of smart financial planning that helps across various spectrums. So, with diverse policies and use cases, there is no reason why you should not consider life insurance as your best bet in a world full of uncertainties.
