Term Insurance in Your 20s

As you grow older, it is only natural that your financial responsibilities will increase. This occurs as your family grows with marriage and children, while you might also be supporting elderly parents or even grandparents. In all probabilities, you will be able to meet these obligations head on as you gain more experience and your income increases with time. But what if you are no longer around to pay the bills because of either death or disability? This is where a term plan can help future proof your finances by ensuring replacement of income lost due to your demise or disability.

Many might think that young individuals have fewer outstanding debts compared to older individuals, however, that’s not always the case. Even in your 20s you might have joint debts such as an education loan with your parents as co-borrowers or even a small business loan using which you want to start or expand your venture. But what happens, if you pass away or are unable to continue working due illness, disability, etc.? This is where the payout of a term plan can help alleviate this financial strain for your family members.

The base term plan is designed to provide one benefit - the life cover payout if the life assured dies. However, when purchasing a term plan in your 20s, you can opt for financial protection against a variety of other eventualities by choosing suitable term plan riders. Common term plan riders that you can choose to enhance the protection offered by your basic term plan include critical illness and disability rider, accidental death and dismemberment rider, etc. While these riders cannot replace the benefits of a comprehensive health plan or an accidental insurance policy, these can protect the financial future of your dependents.

Check out the different riders available with Ageas Federal Life Insurance Term Plans. Know the additional protection these add-ons can offer. Get in touch with a Ageas Federal Advisor for further details.

Many individuals do not like the idea that all premiums paid for a term plan are lost if you outlive the policy term. However, this is not the case if you opt for a term plan with the return of premium benefit. This feature is typically available to individuals who opt for a term plan with 30 years or longer tenure, so is perfectly aligned with the long-term protection needs of a 20 year old purchasing a term plan. This benefit ensures that on surrender of the policy after a fixed period of time, all premiums paid till date are refunded less some key charges. This benefit further adds to the affordability of a term plan for individuals in their 20s.

Statistically, younger individuals are less prone to have medical conditions as compared to older individuals. As a result, insurers tend to have fewer medical checks, a simplified underwriting and issuance process for those purchasing term plans in their 20s. This often makes the process of availing a term plan in your 20s simpler. However, the extent to which these benefits are available vary from one insurer to another.

The risk of a term insurance application being rejected is typically lower when the applicant is younger. In part this is because of the lower risk of health complications occurring when one is younger. As one grows older, the possibility of rejection increases, because of the higher risk of health conditions being detected as part of the mandatory screening process implemented by life insurance companies.

Currently many term plans in India provide the benefit of life cover up to an advanced age as high as 85 years. So, if someone purchases a term plan at the age of 20 years, their life cover benefit could potentially last for a 65 year period. This type of extended coverage can only be availed if you purchase a term plan early in life such as around the age of 20 years.

This is perhaps the most basic reason for purchasing a term insurance plan at any age. Quite often 20 year old individuals have relatively fewer financial responsibilities. But they might still want to ensure the financial protection of loved ones such as younger siblings, aged grandparents, parents, etc. Buying a term insurance policy in your 20s is perhaps the simplest and most cost-effective way to ensure a financial safety net even in your absence.

The key tax advantage of term plans are related to the payment of premiums. As per current rules of Section 123 (read with Schedule XV) of Income Tax Act, 2025, the maximum benefit available is ₹1.5 lakh in a tax year. This benefit can be claimed every year you pay the term insurance premium. So, you could potentially receive tax benefits for a few decades by purchasing term insurance in your 20s.