Term Insurance for Millennials

Why Millennials Should Consider Term Insurance?

Term insurance for millennials addresses their unique financial needs by offering affordability, security, and flexibility. Early investment ensures low premiums, long-term coverage, and protection for dependents, making it a vital part of a young adult’s financial planning strategy.

1. Financial Protection

Since term insurance payouts are guaranteed in the event of the policyholder's death during the policy term, their families can utilise the amount to cover daily household expenses, future financial commitments, and ongoing lifestyle maintenance. 

Not only that, but by combining their term plan with a critical illness rider, they can also expect the term plan to cover their medical treatment costs. This type of financial protection serves as a stress reliever for millennials when they plan to have a family or support their parents. 

2. Corpus Creation

Term insurance is a long-term investment, so you have to pay the premium for at least five years. So, when you purchase a plan, consistent and disciplined investment towards your term plan could actually help you create a lump sum corpus. Whether you have dependent parents, a spouse, or children, utilising this corpus can help save your family finances. 

3. Repaying Loans

Taking loans to buy a new house or to support children’s education is a common occurrence in India. According to a report, approximately 71% millennials in India are dominating the real estate market with the hope of becoming homeowners. 

Suppose a 35-year-old female with a family takes up a loan. She plans to pay off the home loan by the time she turns 60. Now, suddenly, in her 40s, she gets diagnosed with a critical illness and loses her job. Now, the burden of repaying the home loan falls to her family. 

A term insurance policy combined with a critical illness rider could alleviate various financial stresses on family members, allowing them to maintain stability even in the event of such an unfortunate occurrence.  

4. Affordability of Premiums

Although it may seem unusual to have a term plan in your 20s, investing in a term plan early is the best way to lower your premium and lock it in throughout the policy term. Plus, it becomes easier for you to invest that small amount without straining a chunk of your earnings. 

When you delay purchasing a term insurance plan, it increases premiums, as age-related health complications arise, and insurers become more prone to facing early claims.   

5. Tax Benefit

According to Section 80C¹ of the Income Tax Act, 1961, the premiums paid towards a term plan offer tax benefits. Policyholders can claim tax deductions of up to ₹1.5 Lakh. To avail of the tax deduction benefits, policyholders must ensure that the premium does not exceed 10% of the sum assured amount. 

Furthermore, as per Section 80D¹,  a term plan with medical riders, such as a critical illness and accidental death benefit rider, can claim up to ₹25,000 as tax deductions. Under Section 10D, the payouts received from term insurance claims are tax-free. 

6. Additional Riders^#

Riders significantly extend policy coverage. For example, the accidental benefit could be helpful if the policyholder dies as a result of an accident. In this context, dependents could request additional payouts in addition to the basic sum assured amount. 

Moreover, with a premium payment break add-on, instead of terminating a policy, a policyholder can opt for temporarily stopping the premium payments. In such ways, various add-ons enable policyholders to customise their term plans cost-effectively. 

7. Easy Operations

Although term insurance can be purchased both online and offline, most people prefer online policy purchases since they are fast, seamless, and hassle-free. Tech-savvy millennials can easily buy a term plan by visiting their insurer's official website. 

 In fact, digital insurers such as HDFC Life ensure that the online purchase of term insurance for millennials takes barely a few minutes and requires minimal paperwork. When it comes to claim settlement, they also offer instant support.  

8. Flexibility of Premium Payment:

Term insurance offers flexible premium options, allowing policyholders to pay premiums at their convenience or temporarily defer payments. For instance, HDFC Life’s Click to Protect Supreme plan lets policyholders postpone premiums for up to 12 months by opting for the premium payment break rider. 

For example, a 40-year-old professional with a ₹2 Crore**** term plan switching careers can pause payments for six months without losing coverage. This flexibility helps millennials maintain uninterrupted life protection while managing cash flow efficiently.

9. Customised Life Cover:

Many insurers offer customised life cover to align policies with individual needs. For instance, HDFC Life’s Life Plus option under HDFC Life Click 2 Protect Supreme allows policyholders to add a spouse cover rider, providing additional death benefits to the spouse. After the policyholder’s death, the sum assured is paid to beneficiaries, and the spouse receives a percentage of the basic sum assured.

Suppose the coverage does not match personal requirements. In that case, policyholders can adjust premiums or coverage over time using step-up or step-down options, ensuring the plan remains relevant across life stages.

10. Mental Peace:

Last but not least, in today’s hectic lifestyle, it is difficult to eliminate stress. Term insurance for millennials can help secure financial stability, providing psychological comfort. For that, they need to choose the right insurer along with the right plan. Only that could offer long-term confidence and stability.