Term Insurance for Millennials: Planning for a Secure Future

Technological advances have made them enjoy every bit of comfort and convenience, while the recession and the pandemic have exposed them to the hard side of life. No wonder the millennial generation is now aware of the importance of savings and financial security. This in turn is making them choose term insurance over other forms of savings and investment.

There are several reasons for millennials to pick the best term insurance plan as their choice of investment to plan for a secure future. These are:

Financial Protection: Life insurance provides the policyholder’s family with a lump sum death benefit if he/she dies an untimely death. The money helps the family in the time of crisis, helping them to cope and maintain their lifestyle.

Corpus creation: Term insurance with a return of premium option helps millennials to save and build a corpus. This lump sum amount, received at maturity, can be used to fund life goals like higher education, marriage, starting a family, buying a house, or even a retirement plan.

Repaying loans: The sudden demise of an individual can burden the family with outstanding home or car loans, credit card bills or payments. Death benefit provided by term insurance can help in repaying all these debts.

Affordability of premiums: Starting early on savings and investment is always profitable as premiums are relatively lower for young and healthy individuals. Traditional term insurance premiums specifically are cheaper as these policies offer only the death benefit in the event of the unfortunate demise of the policyholder. Typically, a Life cover of 1 Crore at Rs.26/day³, making it affordable for many.

Tax benefit: Term insurance also offers tax benefits which helps millennials plan a secure future for themselves and their family. The premium payments offer a tax deduction of up to Rs 1.5 lakh per annum under section 80C of the Income Tax Act, 1961² while the death benefit is tax-free under section 10 (10D). The maturity benefits of term insurance with return of premium are also eligible for tax exemption if the total premium amount doesn’t exceed Rs 5 lakh.

Additional riders: Term insurance not only protects in case of death, but also accidental disability, and critical or terminal illnesses. To avail of these extra layers of financial security, all one needs is to opt for the respective additional riders¹.

Easy operations: Millennials are the tech-savvy generation, and online payments are the most comfortable and convenient option for them. Term insurance can be easily purchased from the respective insurance company's website and premium payments can be done online as well. Choosing the best term insurance plan is also quite smooth as the online term insurance calculators help the buyers to check and compare premium rates, policy tenures, sum assured and other benefits.

Flexibility of premium payment: Term insurance allows choosing the premium payment schedule as per convenience. One can opt for single payment, limited or regular pay option. The regular pay option further allows the policyholder to pay premiums annually, half-yearly, quarterly or every month.

Customized life cover: Life cover can be customized according to the customer’s needs, life goals and affordability of premiums. However, it’s wise to pick a life cover that is sufficient to take care of all financial needs of the family if the policyholder is no more.

Mental peace: Unlike their parents or the older generations, millennials prioritize mental health over most other things. Thus, term insurance is often their preferred choice as it takes away the stress of what will happen to their loved ones if they die an untimely death.

Convenience, affordability and comfort of financially securing the future-- term insurance thus fits the bill of millennials in every way they prefer.  

Related Articles:

• Salient features of a Term Insurance Plan
• Benefits of Term Insurance
• Difference between Term Insurance and Whole Life Insurance
• Comparing term insurance plans with traditional life insurance cover
• "Non-working" Spouse - Term Insurance Cover
• Planning for the Future

ARN - ED/09/23/4728