Everyone needs to have proper financial planning from the start of their careers. If we properly plan our future, we will not have any financial management issues. Having a financial plan not only means having a portfolio of assets that will give you returns after investing a certain amount per month.
Financial plans also include investing in debt to provide stability and securing the portfolio by having insurance for the assets and other aspects of life. Insurance is one of the best financial planning that you can do. With so much at hand, you might wonder what the right age for insurance is.
Insurance is not something that we buy to increase our wealth. It is not a one-size-fits-all buy for all people. Before buying insurance, people must understand their requirements by accessing their current situation, financial status, and plans. We can not define the right age for insurance . It indeed depends on the individual and his requirements at that time.
What is Insurance and Its Needs?
Insurance is a financial agreement with one of the insurance companies whose purpose is to safeguard you from potential risks in the future in exchange for a monthly fee known as a premium.
To ensure that the individual and his family never get into a financial burden because of some unexpected event, people from a very early career stage start investing in insurance companies.
What is the right age for insurance?
You might ask, what is the best age to buy insurance? But, we must tell you there is no right age to buy insurance as it depends on the individual's needs. But, it is recommended to purchase insurance at the earliest possible.
Therefore, if you can afford to invest in insurance, you should buy it as soon as you turn 18. This is because the Minimum age to buy insurance in India is 18 years.
There is a description for buying insurance at different age groups.
Buying Insurance in your Twenties
In our twenties, we do not have much of family responsibilities. We have a disposable income that we can use wisely. Buying insurance in your twenties would be wise as you do not have many expenses and could easily afford the premiums.
Apart from this, you can get additional add-ons, such as maternity insurance, if you plan to have a family afterward. As you are young and starting early, you have the advantage that your premium would cost less.
Buying Health Insurance in Your Thirties
Now you are in your thirties, which means your expenses will increase significantly as you have more responsibilities, as you will be married and have kids by then. Now, you would want insurance policies covering your whole family in your thirties.
Consider buying family life insurance, as now you are responsible for your family. Earlier, the focus was solely on the individual before buying insurance. Now, he would have to consider his family before making any financial move.
Buying Health Insurance in Your Forties and Fifties
As you have entered your forties, your financial responsibilities are at the all-time highest. You will have some assets you want to secure against any unwanted, devastating event by this time. As you have grown in age, you will have some health issues.
In your forties, you would prioritize home insurance and health insurance as you will need to visit the doctor more frequently now that you have gathered a lot of assets, so safeguarding it also becomes essential. Premiums at this time are high. You might opt for some of the best family plans, but it would still be slightly costlier.
Buying Health Insurance After the Age of Sixty
By now, you would have few financial responsibilities for your family as your children are grown up. As now your age is ancient, you would have doctor visits very frequently. Therefore, you will prioritize your health insurance.
A primary health policy would be enough for you to require a senior citizen health insurance policy . These policies would come with higher coverage and cashless visits to some hospitals with tie-ups with the insurance company.
Why Should You Buy Insurance at an Early Age?
Now comes another question: Why is it recommended to start insurance early in life? Yes, in other aspects of financial planning while buying insurance, it is recommended the earlier you start, the better it is.
You have the benefits of buying insurance at an early age, and you should buy it as soon as you can afford it. There are some benefits of buying insurance at an early age.
Lower Premiums
Your age is one of the significant factors in determining your premiums. The insurance companies consider themselves less liable to the younger people as they are healthier. On the other hand, older people are more prone to illness and require coverage more often, so they have higher premiums. Having lower insurance premiums from the start would cost less overall than buying policies having higher premiums later.
No Pre-policy Medical Check-up
Applying for health premiums early is beneficial as there are pre-medical checkups. So, even if you have any disease or any medical condition, the premium cost would not rise. This option is not available for people above 45 as they are more prone to illness, and their premium cost is also determined based on their medical reports.
Financial Freedom at an Early Age
Having all the aspects of your life covered gives you financial freedom as you are already prepared for potential future problems. This also gives you a sense of relief as all worries have financial protection to safeguard them.
Importance of Insurance in Financial Planning
Financial planning is a systematic process to approach your goals and safeguard your future. Insurance plays a vital role in financial planning. Insurance keeps your financial journey on track and does not get off track because of an unexpected event. This is why insurance is important in financial planning:-
Risk Mitigation
There can be many unexpected events in life that can add up more unwanted expenses to your budget. Insurance is essential as it mitigates the risk of derailing our financial plans because of some devastating happening. Insurance cautions you against illness, accidents, disability, and many more.
Goal Achievement
It helps you to achieve your financial goals like buying cars or a house, children’s education, or retirement planning. Currently, you do not have to worry about any risk and you can focus on your goals.
Debt Management
Insurance can be used for debt management because in case if you die without paying off your debt, your insurance coverage can be used to pay off your debt so that the debt does not become a burden on your children.
Sense of Financial Security
Knowing that you and your family are secure against any financial problem in the future gives you a relaxed state of mind, and you can live your life more freely.
Use of different types of insurance in financial planning
Different types of insurance have different purposes in financial planning. We can use them wisely to our advantage.
Life insurance:-
This is to provide financial stability to your family and dependents in case you die.
Health insurance:-
Health insurance covers all your medical bills so that your financial plans are unaffected by any unexpected illness or health issue.
Disability insurance:-
It is used to recover your income loss due to disability to work.
Home insurance:-
In your financial journey, ensure you do not get off the track because of any natural disaster causing damage to your property.
Buying insurance early in your life offers various long-term benefits at an affordable cost. Therefore, if you can afford it, you should buy insurance as soon as you turn 18 or as soon as you can.
Frequently Asked Questions (FAQs)
