Habits that acts as a roadblock in millennial generation’s way to buy term insurance
Today’s generation believes in living life to the fullest. They have multiple interests, and they know how to make most of their income. And they are also aware of protecting their future financially while making fruitful investments.
However, at a certain point, they are too laid back to make a move of buying an insurance policy. As per Max Life Insurance’s flagship survey ‘Max Life India Protection Quotient’ 2.0, in association with KANTAR states that still out of ten people only three buy term insurance whereas the penetration of life insurance in India is 70 percent.
Another data by the Insurance Regulatory and Development Authority of India (IRDAI) says that just 25 percent of the population in India has life insurance which is a surprising fact. The reason for this can be attributed to faulty lifestyle habits and misconceptions, along with various other factors. Therefore, let’s discuss some important factors that usually blocks the way of today’s generation from buying term insurance, avoiding which can help them understand the concept of term life insurance holistically.
Fact 1: The perception of insurance being expensive
This is one of the most common misconceptions that prevails among today’s generation, just because they don’t have a clear understanding of the insurance policies available in the market. And as a result, they ignore investing in it without seeking guidance from any financial or insurance experts. Although those who have term insurance, the majority of them do not know the right sum assured amount for them and end up buying something that is not even required or suitable for them. A simple thumb rule for calculating the insurance coverage amount is that it should be at least 10 to 15 times your annual income. Term life insurance is among the least expensive way to secure your loved ones financially in your absence. The early you buy term insurance, the more affordable it gets as you get to pay a significantly low premium. Because at a young age, your life expectancy is high, and the risk factor is low. Insurance companies offer the insurance coverage amount considering your life’s risk factor. Moreover, the term insurance policy provides tax benefit along with several other benefits, providing all-round financial security.
Fact 2: Tendency to play safe
The millennial generation likes to spend, but, in many ways, they are quite reluctant in taking a risk when it comes to spending money. Perhaps because they believe in keeping a substantial part of their income for recreation like travelling or fulfilling their dreams or passions. This also refers that they are hesitant on investing in a product that does not give a return. Now this lack of planning is one of the biggest blocks in their road to purchase term insurance. As in case of any mishap with them, their family could be in a vulnerable situation. In such situations term plan act as a saviour, providing long-term financial stability to your loved ones by offering a lump-sum, monthly or partial death benefit pay-outs or insurance coverage amount in your absence.
The sum assured in term life insurance is much higher than the maturity benefit of any regular life insurance policies. The term insurance premiums are also much lower than the life insurance premiums, making it more economical. But still, people in urban India purchase life insurance rather than term policies. And this could be due to lack of awareness as Max Life India Protection Quotient’ 2.0 survey also reveals the term insurance penetration remains at 28 percent as compared to 70 penetration of life insurance (as mentioned above). Term plans also provide extra coverage for critical illness, disability, loss of income in the form of riders.
Fact 3: Insurance – the least important product
The people belonging to this generation are not long-term planners; they prefer going with the flow. And many of them do not consider insurance as a mandatory product if they have a healthy and active lifestyle. But they forget about the uncertainties in life and also the relation between health and term insurance. Term insurance is a pure protection plan that offers financial assistance to your family in case of any unfortunate event. It also provides long-term satisfaction that your loved ones will be financially independent in your absence. Now if you buy term insurance when you are healthy and hearty, you can enjoy low premiums for the same coverage amount which will cost you more if you buy it in the later years of life. Therefore, you should prioritise buying term insurance when you are young and healthy.
The moral of the article is that don’t let these blocks to come between you and term insurance. As the saying goes that ‘Term Life Insurance is part of a good defensive game plan- David Ramsey’, hence you should also plan it well in advance in your life. You can visit BimaKaro.in to gain more knowledge about Term Insurance and even leave your number to receive a call back from their insurance experts to have a clear understanding of term life insurance.