We have heard it time and again. Buying insurance at an early age in life is the best thing to do. Ever wondered what is the main reason behind this? With a horde of advantages, getting an insurance cover-life or health at a younger age is a wise decision. Here is why.
The Myth and the Fact
“Why insurance now? I am young and hale and hearty. Insurance is only after I am forty.”
A very common thought process, many youngsters shield away from getting an insurance cover in the early years of life. The notion is that an uncertain event such as death or health issues may not occur early in life. The fact is however, life is filled with uncertainties and there isn’t any age limit here. Insurance is thus a necessity at all walks of life to cover uncertainties.
Reasons Why You Should Get it early
1. The cost: The prime and most important reason to get insurance early is the cost factor. Premiums are much lower when the insured is younger. Premiums in any insurance plan is based on age and cover amount. At an early age, on an average people are healthier and the insurance company perceive the risk to be low, thus keeping the premiums low.
2. Accumulate cash value: Applicable to endowment or retirement plans, where a savings element is incorporated, buying early helps to build substantial cash value on your policy. Maximising returns from investment is what almost all of us seek. And the way ahead to achieve this is to let your investment grow over a period of time. With the power of compounding your investment would yield more when it is for a longer tenure. The earlier you start the more time your money has, to plough back the interest, and more the years, for compounding to have an impact on your investment. By starting early, you invest lesser and have more time to save for financial goals such as retirement.
3. Benefits of cumulative bonus: Another advantage of buying it early is getting an opportunity to accumulate bonus. Insurance companies offer a cumulative bonus for every claim free year. This bonus could be used to reduce your premium in subsequent renewals. The more the claims free years, the more the accumulated bonus.
4. The clause of waiting period in health insurance: Health insurance policies prescribe a waiting or cooling period for pre-existing diseases. A pre-existing disease (or PED in short) is a medical condition or ailment that is present in the individual prior to buying the policy. The ailments may be genetic in nature or lifestyle related. These PEDs are generally covered only after completion of the waiting period of 2 to 4 years from the date of buying the policy. Keeping this in mind, it is always advisable to get a health cover early in life. The earlier the plan is purchased, the earlier the waiting period is completed. So, when a policy is renewed regularly for many years, an insured will be able to seek benefit, without having to worry about any waiting period.
5. More options and a comprehensive cover: The number of plans offered at a younger age is much more than what you may get at the age of 40. You thus get a chance to choose from a wider range of products and get a more comprehensive cover.
6. More Stringent Requirements at a later age: As one grows older, the norms and pre policy evaluation get more stringent. The qualifying requirement gets tougher as insurers look into detail policy holder’s health, family history of ailments etc... It could get harder to get an insurance policy after the age of 40.
Buying it early Gives Your Family the Protection They Need The Most
We live in a world of uncertainties. Mishaps, natural disasters and illnesses may strike us without any warning. We may not be able to avoid or control their occurrence; however, we could prepare ourselves to handle the aftermath. Insurance policies work towards this objective by providing the much needed financial support to the insured’s family in the need of the hour. Today, insurance policies have evolved into a variety of forms. And opting for the right policy should be done early in life. It is an important step to ensure you and your family is financially protected and is prepared at all times to face an eventuality.
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The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal. You may write to the author at Twitter on @dyohannan