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January 22, 2021

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Feel like indulging in some shopping to beat the pandemic blues? That pair of shorts you've wanted, that blue skirt you have been eyeing for a while...social distancing has meant that we have all comfortably moved on to online shopping for our fashion needs. Since online shopping is such a breeze, why not start looking for some financial products like life insurance as well while you are at it?

Shopping for a product such as life insurance is bound to make a huge difference to you and your loved ones. And yet, the average Indian continues to stay underinsured. According to the recent Swiss Re sigma report* on insurance in India, life insurance penetration in India was at 2.82 percent for financial year 2020, while the world average for life insurance stood at 3.55 percent. This drives home the need for greater insurance adoption in the country.

Why does life insurance matter?

Life insurance helps families cope with the breadwinner's loss on financial terms as they get a death benefit. There are many kinds of insurance schemes that you can choose depending on your financial situation, commitments, age and family.

Some insurance plans offer guaranteed benefits that get paid out as lump sum, income option for a fixed term or lifelong. If you choose term insurance, i.e., for a specific term with some additional covers called riders, you get many advantages. Medical costs arising out of treatment for critical illnesses, accident cover, disability-related cover are all provided as part of riders, depending on which one you choose.

Life insurance matters because it helps you achieve any long-term goals you may have, such as children's education, buying a home or retirement. It also helps save taxes as per conditions mentioned in Section 80 C and 10 (10D) of the Income Tax Act. 1961.

Start early to save premium expenses

So, what's a good time to buy life insurance? Now is as good a time as any to buy life insurance. In fact, the earlier you start, the better it is.

Buying insurance early turns out to be economical for you because premiums increase with age. Take the example of Aravind, a 25-year-old healthy, non-smoker male who is working in an IT firm. He buys a term insurance policy of Rs 1 crore for 40 years, ie, till he turns 65, and his annual premium is roughly in the range of Rs 6,000. If he were to buy at 35 on the other hand, his annual premium is almost double at Rs 12,000, while if he were 45 while buying insurance, the premium he would have to shell out yearly amounts to nearly Rs 25,000 or higher.

Doing the math tells you that if Aravind were to buy insurance at age 45, ie, for a term of 20 years, he would have to shell out Rs 5 lakh. If he were to buy at 35, he would have to shell out Rs 3.6 lakh for 30 years. If he were 25, he would have to shell out Rs 2,40,000 in premiums. This is a significant amount of savings that can be used for other investments.

Yet another aspect to remember is that it helps to buy insurance for a longer term. If your cover ends at age 55, it may turn out to be expensive to buy insurance again considering that premiums are higher. The chances of illnesses, critical or lifestyle-related, are higher with age.

When you are younger, the chances of your insurance being rejected are lower as you are likely to have a healthy medical history. The longer you delay, the possibility of a medical condition that affects premiums and insurance acceptance increases.

Conclusion

Now that you know why life insurance matters, go ahead and add a policy to your shopping cart. You can look for a policy that suits your and your loved ones' needs. You could also choose any term plan from as HDFC Life that offers benefits such as life stage protection, offers extra cover with each life stage such as marriage and birth of children.

ARN:ED/01/21/22043

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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