Everything millennials need to know about life insurance but didn’t know whom to ask
Table of Content
8. Bottom line
When you are young and life is just taking off, retirement seems like a long distance away. Also, there is a prevalent thought: "I'm young and healthy. Why do I need life insurance? I shouldn't have to worry about it right now." The irony is that the younger the investor, the better positioned they are to benefit from taking out insurance. Age and health are two major drivers of how much you'll be paying for life insurance. Why not lock in a low price when you have them working for you?
Benefits of being a young investor
Young and healthy millennials are low-risk customers. So, life insurance premiums are far more affordable. Additionally, if the customer is a non-smoker and has no pre-existing conditions, insurance providers are likely to provide the lowest rates possible.
It is always better to be prepared for any eventuality. Taking care of your family is the most important thing you can do but, if you pass away, your income passes away too. Having invested in a life insurance policy will offer peace of mind, and loved ones can grieve their loss without being in a financial bind.
If you are single, why do you need life insurance?
Life insurance is not just for those with a spouse and children. Even single adults with no children need life insurance. You could have aging parents, whom you are planning to help out financially. If yes, then getting life insurance is a great idea.
If you have debts that you alone are responsible for, life insurance can help settle the debts out of the life insurance proceeds. Perhaps, you plan to have children later. Buying life insurance now could be a great option. The younger and healthier you are, the cheaper the policy will be. When you do have children, you'll already have some coverage in place.
There could be a family history of significant health issues - heart disease, diabetes, or other inherited health conditions. So if you're likely to be diagnosed with a condition like this in the future, buy life insurance while you're still healthy.
If you want to have a family someday, plan to cover them with life insurance while you still qualify for affordable coverage. Then you won't have to worry about it in the future.
If you are married, why do you need life insurance?
Marriage is the perfect time to start shopping for life insurance. It's when you start sharing your life, your debt, financial responsibilities and expenses with the one you love. Even if one spouse out-earns the other, both are a valuable part of the team. It is always a great idea for both spouses to have life insurance. It offers peace of mind that if one person were no longer around, the other would be financially sorted. Life insurance serves as a safety net for partners
Additionally, if and when planning to have children, it is important for both husband and wife to buy and maintain individual term life insurance policies. Securing life insurance for both makes it easier for the surviving spouse to keep life as steady as possible for children after losing a parent.
How much insurance do you need?
Life insurance isn't a way for you to get rich. It's a way to protect your family from the financial difficulties that might undergo due to your passing. Having the right amount of life insurance would help your family to take care of any final expenses and maintain their current lifestyle after you're gone.
In terms of how much life insurance you need, some financial advisers say you should insure five to seven times your salary. Others believe it should be three times your income plus debt. It is hard to come up with a number as your needs can change from year to year. But we here at HDFC Life have incorporated an online calculator to determine how much is needed.
How do you find the target coverage amount?
According to American personal finance company NerdWallet, the answer is simple: financial obligations minus liquid assets. To calculate obligations, add your annual salary (times the number of years that you want to replace income) + your mortgage balance + your other debts + future needs such as college and funeral costs. If you're a stay-at-home parent, include the cost to replace the services that you provide, such as childcare. From that, subtract liquid assets such as savings + existing college funds.
Why should it be a priority in a 'today' lifestyle that doesn't account for a tomorrow?
The fast-paced lives of millennials leave them with virtually no time to plan a healthy lifestyle. While the living standards have improved, lifestyle diseases are on the rise too. According to reports from the Centre for Science and Environment (CSE) by 2020, more than 1.73 million new cancer cases are likely to be reported each year. India presents 49% of the world's diabetes burden - the figure is expected to ascend from 72 million in 2017 to 134 million by 2025. In 2016, India had 35 million chronic asthma patients –every third child in Delhi has impaired lungs. Every year more than 2.7 million people in India die of heart diseases– 52 per cent of individuals are in the age group of 30 to 69
In addition to switching to a healthier lifestyle, it is important to protect yourself and your family with a good Term plan. Life insurance plays a very central part by providing financial assistance to your loved ones in case of eventualities.
Why planning for retirement years is important?
Most millennials hope their retirement savings should last until they do. With a life insurance plan, you can ensure you have a regular stream of income every month. Put in some money regularly in a life insurance product and enjoy a steady income every month even after retirement.
An online term insurance plan by HDFC Life Click 2 Protect Life, offers comprehensive security and cover against three uncertainties - death, disability, and disease. Riders covering other risks such as accidents are available and can be attached to term plans to provide much wider protection for an insurer's family. Insurers can avail 5.5 per cent discount on premium for policies bought online directly. According to official reports, HDFC Life has achieved 99.03 per cent claim settlement ratio for FY 2018-19 for this plan.
The plan is also customizable, as it offers nine options, allowing you to secure your family's financial future when you are no longer able to do so. The nine variants are: Life Option, Extra Life Option, Life Long Protection Option, Income Option, Income Replacement Option, Extra Life Income Option, 3D Life Option, 3D Life Long Protection Option, and Return of Premium Option.
It is prudent to start investing in an insurance product as soon as one starts earning.
So, make yourself future ready even as you enjoy your present to the hilt!
Click on the name now to know more about HDFC Life Click 2 Protect Life
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