Invest in a child plan with waiver of premium option.
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Many people in their 30s hesitate to buy life insurance as they believe that they do not need insurance at this stage of life and that they can defer this investment to a later date. But the pandemic has shown us that life can be unpredictable and uncertainty can strike at any time. Hence, investing in life insurance at an early age can be a life saviour as it offers financial security to your family in case of your unfortunate demise.
While investing in a life insurance plan at an early age is definitely beneficial, there are certain factors that one must consider. Let us look at a few of these factors in detail.
Adequate life cover
The 30s are the years where family life takes priority as people focus on marriage and kids after reaching a certain amount of stability in their careers. With this additional responsibility, it is crucial to invest in a life insurance plan which offers your family financial protection in case of your untimely death.
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In order to adequately protect your loved ones, you need to select the ideal life cover, based on your Human Life Value (HLV). The amount of life insurance cover required would depend on your age, income level, marital status, dependents and amount of financial liabilities. Your life cover should be sufficient to cover any financial liabilities as well as provide a monetary surplus to help your loved ones tide over the immediate financial impact of your demise.
If you have a child, you could also consider investing in a child plan with waiver of premium option. Such a plan helps to secure your child’s dreams such as higher studies or education abroad, even in the absence of the family breadwinner.
Invest early in a life insurance plan
By investing early in a life insurance plan, you are likely to pay lower premiums as your health is better and in general, mortality tends to be lower in younger age-groups. By spending less on premium, you can save more and invest this money in other avenues.
You are also likely to get a larger life cover if you purchase a plan at a younger age. You might get a life cover of 15-20 times your annual income if you invest in a plan in your 30s, as compared to about 5-10 times your yearly income if you purchase a plan in your 40s or 50s.
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Additional riders
To enhance the protection aspect of a base life insurance plan, one can opt for various riders depending on one’s needs. These riders could be accident, disability, critical illness or waiver of premium in the case of child or even retirement plans. Riders help make the plans more potent and cover multiple aspects of risk that a customer could encounter. These riders are optional and come at an additional cost. However, when you are in your 30s, the additional cost is likely to be nominal and the riders are easier to get.
Opt for a separate plan
Certain employers offer their employees coverage under a group term insurance plan. While this does provide a certain amount of financial protection, it is important to keep in mind that this financial security is valid only until you work with the same employer. When you switch your job, this coverage will no longer apply to you and your new employer may or may not have a group cover for their employees.
You also need to keep in mind that when you are in your 30s, you are likely to have a spouse and children as well as dependent parents, and hence have additional responsibilities. It is possible that the cover provided under the group plan might not be sufficient to meet your family’s financial requirements in the event of your unfortunate demise. It is, therefore, advisable to invest in a separate life insurance plan that adequately covers you and your family in case of any unforeseen circumstances.
Adequate Protection
The amount of life insurance cover would depend on your age, income level, marital status, dependents, among others
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Riders help make the plans more potent and cover multiple aspects of risk that a customer could encounter
The writer is MD & CEO, Ageas Federal Life Insurance
