As a young college going student, buying a life insurance policy could be the last thing on your mind amidst your study schedule. Getting an insurance plan is conceived as something most adults do but times have changed today. Having a policy is not just about a life cover but is also known for wealth creation with options like Unit-Linked Insurance Plan (ULIP) and money-back policy. Let’s look at five reasons why you need to buy an insurance policy while you are in college:
1. Grants Lower Premiums
When you are young, the premium rate that you need to pay for securing a life insurance policy is much lower. If you compar this with the premium that you would have to pay in your late 20s or 30s, the cost increases exponentially. As a college student, if you were to buy a term plan, the money you would have to invest would be less and in exchange, you would get a life cover that will cater to your family in the future.
2. Provides a Life Cover
When you buy a life insurance policy, you get a life cover in case something were to happen to you. Due to this cover, a lump sum amount can be availed by your beneficiary to safeguard their future and financial needs. The amount of sum assured can be chosen by you keeping certain scenarios in mind to understand the required sum.
3. Fulfills Wealth Creation Goals
An insurance policy is not just a tool to get coverage but can also be used for long-term wealth creation. You can achieve this by going for plans like money-back policy, ULIP, endowment plan, etc. In such types of plans, you get a maturity amount after the policy term expires. ULIP has an investment component where you can choose to invest in equity or debt as per your risk appetite. A money-back plan gives regular payouts every five-years of the policy term and also has maturity benefits. Such plans enable you to accumulate money and also pay off debts like student loans you may have pending.
4. Gives Tax Benefits
When you start earning, you can start claiming income tax deductions to avail tax benefits. The premiums paid towards securing an insurance policy can be claimed under Section 80C for tax exemption. This helps you reduce your taxable income and comes in handy when you are just starting out as a fresher with a lower salary.
5. Helps in Planning for the Future
Whatever you may plan for the future, be it a marriage and children or higher education, getting life insurance as college students helps in making those plans come true. With a term plan, you know your family won’t be left to fend for themselves even if it’s your spouse or an education loan that parents have taken for you. You can plan your future with the help of an insurance policy and understand what kind of life insurance does your future demand.
With these five reasons, you will now be able to understand if you should consider buying life insurance as a college student. With the benefit of age on your side, you are planning well ahead of time for which you can reap the benefits in the future. But if you go on to get a term plan when you have a stable job and family, it will be too late. This is vital as to why you should get insured early in life.
