Introduction
Which is the best insurance policy in order to take maximum benefits before you turn 30 years
Which Life Insurance Policy Should You Take When You Turn 30:
When you are in your 30s, it can be a great time to buy life insurance. You’re at an age where, if you’re in good health, you’re likely to be able to get affordable coverage with a term life insurance policy. And you’re probably at a point in your life where others depend on you financially and would need a way to replace your income if you were no longer there.
Those are just a few of the reasons that buying life insurance in your 30s is often one of the most practical, impactful and affordable times to secure coverage.
What kind of life insurance should a 30-year-old buy?
There are two types of life insurance that are commonly purchased: term and permanent.
Term life insurance provides a simple, affordable way to help financially protect your family for a specific period of time – typically 10, 15, 20 or 30 years. If you die during that period, your insurer will pay a death benefit to your beneficiaries. And you can get this coverage for less than the cost of many everyday expenses.
Permanent life insurance comes in a few varieties – the most common being whole and universal life. Unlike term, permanent policies provide coverage for a lifetime and include a cash value component that can grow or decrease over time. These features are why permanent policies can cost anywhere from 5 to 20 times more than a term life policy.
How much coverage does a 30-something need?
While individual life insurance needs vary, you can get a general sense of your coverage needs by taking a closer look at your income.
So, when figuring out how much coverage you need, you should factor in the following:
- Lost income and living expenses, like rent or daily bills
- Debts you leave behind
- Child care if you are a stay-at-home parent
- Funeral, burial, and other final expenses
- College expenses for your children
- Unpaid medical bills or taxes
If you have children, carry substantial debt or own a business, you may need more. Again, a life insurance needs calculator can help you make that decision.
Here are smart reasons to buy life insurance in your 30s:
1. You have a family now
In your 30s, you might find yourself buying a house, getting married, or starting a family. You have plenty of financial responsibilities, and you likely have people who depend on you financially. If you were to pass away, your loved ones might not be able to pay the bills without your income.
However, you can financially protect your family from your death if you have life insurance. When you buy a policy, you enter into a contract with a life insurance company. You pay a monthly or annual premium to the company in return for a payout to your beneficiaries (the “death benefit”) if you die while your contract is in place.
The proceeds from a life insurance policy can be used by those persons you name as your beneficiary(ies), who may be your partner, kids, designated guardians or even your parents – to help pay for a variety of expenses, including the following:
- Mortgage or rent
- Child care costs
- Groceries
- Utilities, transportation and other regular expenses
- Medical bills
- Other insurance policy premiums
Think of your policy as a lifeline for your loved ones. Without it, your family likely would struggle financially. A survey by non-profit organization Life Happens found that 4 in 10 households without life insurance would have trouble paying living expenses if their primary wage earner died.
You also can think of life insurance as a very important first gift to your child. You likely have hopes and dreams for your children that cost money to make happen. Buying a policy now helps ensure that your family has money to continue affording those plans. Knowing that your child is protected and will have a life insurance policy payout to put toward things like taking dance classes, going to camp or attending college, even if you were no longer here, is one way to begin leaving a legacy for your child.
2. You make more money now
Chances are, you’re making more money in your 30s than you were in your 20s. Your higher income would be difficult to replace if something were to happen to you.
However, a life insurance policy could help replace some of your lost income. Experts often recommend that you buy coverage with a death benefit that is equal to five to 10 times your annual salary. Remember that pay disparities among women and men can lead to a life insurance gender gap, so this rule of thumb doesn’t always stack up.
To find out how much coverage you need, use an online life insurance calculator for a personalized recommendation
3. You could save money by getting life insurance now
The financial protection you can provide for your loved ones makes life insurance worth the cost. Fortunately, the cost of life insurance can be quite affordable if you buy a policy in your 30s.
The rate you pay for insurance is determined by several factors, including your age. Considering that, it’s probably no surprise that you can lock in a lower insurance premium by getting coverage when you’re young and healthy.
4. You could avoid medical hurdles
Your health also plays a big role in your ability to get life insurance coverage and the rate you’ll pay for it. Healthier adults pay lower rates because they’re considered less risky for the insurer. So, insurers typically require applicants to go through a medical underwriting process.
For example, when you apply online for a term insurance policy from Haven Life, you have to answer questions about your personal health history and your family health history. Your responses will be verified with a third-party vendor such as the Medical Information Bureau.
5. Your family needs cash for funeral expenses
Losing you will be hard enough for your loved ones. You don’t want to make a bad situation worse by leaving your family on the hook for your funeral costs.
A funeral, cremation or burial with a memorial marker can easily cost upwards of $8,000, according to the National Funeral Directors Association. A life insurance policy’s death benefit could be used by your family to pay for those costs.
6. You need to protect your business
If you have any business dealings, life insurance can be important for succession planning. Let’s say you buy and sell real estate for a profit. What would happen if you passed away in the middle of a deal? What if you flip houses for a profit? How would your family handle your project if you passed away during a flip or a major remodelling job?
Your family could face similar struggles if you run a small business that buys and holds inventory, has business-related debt or has ongoing business expenses to cover. If you buy enough life insurance, on the other hand, you can leave behind enough cash for your family to deal with your business holdings the way you would have wanted.
Reasons to buy term insurance before you turn 30:
Term insurance provides life cover for a fixed duration and offers financial aid to your spouse, parents and children in case of an unforeseen event. That’s why, we discuss the benefits of term insurance, so you can take an informed decision for your family’s financial security.
Reason 1: Your family is financially secure –Term insurance plans ensure your financial stability and offers a financial blanket to your family. An unpaid loan, college fees for kids, financial aid for spouse and parents can easily be covered by a term plan. It takes care of your family’s lifestyle in your absence. Thus, ensuring that the burden of your liabilities does not fall on your family. Term insurance is a small price to pay for your peace of mind.
Reason 2: Your age ensures lower premiums – The younger you are, the lower is the risk of payment by the insurance company, ergo lower premiums for your purchase. Also, once the premium is locked, it does not increase with your age. So, buy term insurance before you hit your 30s to lock your affordable premium.
Reason 3: You can opt for a larger life cover – As term insurance plans have no cash value, they are available at an affordable cost compared to other endowment plans of the same cover. The added benefit is, it allows you to provide for your family and strengthen their financial stability in your absence.
Reason 4: You can add innovative riders – Riders offer additional financial cover over and above the basic sum assured you will get from your term plan. So, riders such as critical illness rider will offer an additional payment (rider sum assured) in case of diagnosis. There are other innovative riders which allow you to cover disability, employment loss and an option to waive premium charge. This allows the policyholders to select relevant riders with the term plan to make life cover more suitable and meaningful.
Reason 5: You can enhance cover – Term insurance plan gives flexibility to enhance the life cover during important stages in your life. Most policyholders want to increase the coverage after birth of a child or after marriage. This makes it possible for you to enhance your cover based on your responsibility and capabilities.
Reason 6: You can save tax – Purchasing a term plan also means that you save tax. Term insurance plans provide dual tax benefits. The premiums you pay are tax free under Section 80C and the benefits are tax free under Section 10D. Term insurance plan enables you to do tax planning and preserve your financial resources for your family’s stability. So, do not forget to deduct these premiums after purchasing term plans.
Reason 7: Your employer term plan is not enough – Your employer will provide a plan suited to his needs and this will probably end once you switch your job or change career paths. Term plan offered by your employer may not be portable and will vary on the number of years of service also. So, it’s best to rely on your judgement for your family security.
Come, be responsible and secure your family’s future today.
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