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In a world full of uncertainties, know ten compelling reasons why every Gen Z should consider purchasing a term plan.
Purchasing a term life insurance policy at a younger age offers the significant advantage of locking in lower premiums. (Representative image)
By Sandip Goenka
Navigating the complexities of adulthood, as Gen Zs move further, the financial landscape can often feel overwhelming to them. Starting from balancing career growth, managing loans, and planning for future goals, it’s easy to overlook key aspects of financial well-being—such as purely protecting one’s life. Understanding and investing in a term plan can serve as a vital pillar for financial security.
In a world full of uncertainties, here are ten compelling reasons why every Gen Z today should consider purchasing a term insurance plan:
Comprehensive Financial Protection for Dependents
A term plan ensures that in the event of an unforeseen circumstance, the loved ones are fully protected. This coverage can help pay off outstanding debts such as home loans or personal loans, while also covering daily living expenses such as rent, groceries, and utility bills. Beyond immediate needs, a term life insurance policy provides a crucial safety net, enabling the family to maintain their standard of living and continue pursuing long-term financial goals, such as children’s education or future investments, without financial strain.
Protection against Lifestyle-Related Risks
With an increase in lifestyle-related diseases among young Indians due to factors like stress, sedentary habits, and pollution, term life insurance offers crucial financial protection against unforeseen health-related fatalities. Additionally, term insurance plans often provide riders or add-ons such as critical illness coverage, which offer a survival benefit if you’re diagnosed with a specified critical illness. This means you receive a lump-sum payment upon diagnosis, helping to cover medical expenses and providing financial support during recovery.
Affordability and Cost-Effectiveness
Purchasing a term life insurance policy at a younger age offers the significant advantage of locking in lower premiums. Since premiums are primarily determined by age and health, Gen Z can secure these reduced rates, which remain fixed throughout the policy’s duration. Starting early allows you to obtain optimal coverage at a much more affordable cost, making term life insurance an extremely cost-effective way to safeguard the financial future.
Additionally, as a pure protection plan without an investment component, term insurance is generally more affordable than plans that combine protection with investment, allowing you to focus solely on securing your loved one’s financial well-being.
Coverage for Outstanding Debts
Many Gen Z carry significant financial responsibilities, such as student loans, credit card debt, and home loans, which can place a heavy burden on the financial future of their financial dependents. In the event of an untimely demise, these debts don’t just disappear—they often fall to family members or co-signers, adding emotional and financial stress during an already difficult time.
A term life insurance plan can help alleviate this worry by covering these outstanding debts, ensuring that the loved ones are not left struggling to manage payments. Whether it’s paying off large loans or settling everyday financial obligations, term insurance provides a critical safety net, preventing the financial burden from being passed on to family members. This allows them to focus on emotional healing rather than financial stress.
Flexibility Beyond Employer-Provided Insurance
While employer-provided group life insurance is a valuable benefit, it may not offer sufficient coverage for individual needs. Moreover, this coverage typically ends when you change jobs. According to a report by KPMG, only 30% of employees feel their group insurance is sufficient. A personal term plan can fill this gap, offering additional financial security tailored to individual circumstances.
Easy and Convenient Purchase Process
With the rise of digital platforms and online insurance providers in India, purchasing term life insurance has become quick and hassle-free for Gen Z. The Direct-to-Consumer (D2C) online process simplifies buying a straightforward product like term insurance, allowing you to compare plans, get instant quotes, and complete the purchase entirely online without intermediaries. This convenience makes it easier than ever to secure financial protection for loved ones.
Option to Increase Coverage Over Time
Some term plans provide increasing cover options that adjust for inflation, ensuring that the sum assured grows over time. This feature is particularly beneficial in today’s economic landscape, where the cost of living can rise significantly due to inflationary pressures. By selecting a plan with this option, policyholders can ensure that their coverage keeps pace with rising expenses, protecting their family’s financial security in the long run.
Income Replacement
If you are a primary contributor to the household income, term insurance acts as a crucial income replacement for dependents in the event of an untimely demise. This financial support helps the family manage ongoing expenses, such as rent or mortgage payments, utility bills, education fees, and healthcare costs, ensuring they maintain their standard of living. By providing a death benefit, term insurance alleviates concerns about financial instability, allowing loved ones to focus on adjusting to their new circumstances without the added stress of immediate financial hardships.
Term Insurance Tax Benefit
Term life insurance premiums qualify for tax deductions under Section 80C of the Income Tax Act, allowing policyholders to claim deductions up to ₹1.5 lakh annually. Additionally, the death benefit received by beneficiaries is generally tax-free under Section 10(10D). This dual benefit makes term plans an attractive financial investment for Gen Z.
Peace of Mind
Unlike previous generations, Gen Z places a higher priority on mental health and well-being. As a result, term insurance has become a popular choice for them, as it alleviates the stress and anxiety surrounding the potential financial impact of an untimely death on their loved ones. This proactive approach to securing their family’s future allows Gen Z to focus on their mental health without the burden of worrying about what might happen in the event of their absence.
To conclude, in a rapidly changing economic landscape, securing a financial future is crucial for Indian Gen Zs. Purchasing a term life insurance plan is a strategic move that offers affordability, flexibility, and peace of mind. As they build careers, take on debt, and start families, a term plan becomes an essential tool in their financial arsenal, ensuring they are prepared for whatever life may bring. With the benefits clearly outlined, it’s time for Gen Zs to take this vital step toward financial security.
-The author is Chief Executive Officer, ACKO Life Insurance. Views expressed are personal.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Readers are advised to check with certified experts before making any investment decisions.
