Life insurance is one among a long list of things modern finance differs from how previous generations plan finances. Affordability, flexibility, and being able to do everything online are some features that these financial products have drummed in for millennials, and life insurance is no exception. Term plan insurance is now gaining popularity over traditional life insurance policies. But why? Let’s take a deep look into why that is happening.
Affordability Matters to Millennials
The millennials prefer prudent management of finances. They are not fond of spending lavishly, and term plan insurance is the answer to this factor. Term plan insurance will offer coverage worth much more than traditional life insurance policies, including endowment plans or whole life insurance, at much lower premiums.
For example, a 30-year-old non-smoker can get a term insurance cover of ₹1 crore for as low as ₹700-₹1000 per month, but the same cover will be unaffordable in the traditional life insurance product because of its savings component. Most millennials would want to invest in products that provide a higher return and hence don’t see much value in tying up their money in low-yielding life insurance products.
Simplicity and Transparency
The other main reason why millennials prefer term insurance is its simplicity. Traditional life insurance policies have complicated structures, multiple charges, and unclear returns. Bonus components, maturity benefits and investment-linked returns can seem very complicated.
On the contrary, term insurance is very simple: pay a fixed premium and, in case of your unfortunate untimely death, dependents are paid. It’s this simplicity that appeals to millennials as they conduct research and make well-informed financial decisions.
Digital Convenience & Instant Decision Making
Millennials are digital natives. They rely heavily on online platforms for financial transactions, including purchasing insurance. The availability of term insurance calculator allows them to compare different plans, customize coverage, and make informed decisions without visiting an insurance agent or branch.
With online term plans, purchasing a policy has become seamless. Most insurers offer a fully digital buying process, thus eliminating the paperwork and cutting down on turnaround time. This is a solution that resonates with the quick and hassle-free solutions of the millennials.
Investments Instead of Savings-Based Insurance
Traditional life insurance, though carrying with it an element of investment also, has comparative returns much lower than other kinds of investments possible through mutual funds, stocks or real estate among others. Also, millennials believe in separating both their insurance as well as investments. They require term plan insurance for full protection and accumulate savings in comparatively high-return generating investments.
For instance, instead of investing money in an endowment plan that gives a return of 4-6%, a millennial may invest in a term plan and the rest in mutual funds that may generate 10-15% returns annually. This way, the wealth is created better and also provides financial protection.
Flexibility and Customization Through Riders
Unlike traditional life cover, term insurance has various rider add-ons that meet the needs of its policyholders. Millennials would like the flexibility to add on for example:
Critical Illness Rider- The insurance also includes the insurance part, which deals with major diseases, such as cancer, heart attack or kidney failure.
Accidental Death Benefit- An additional design would be subjected to unusual deaths.
Waiver of Premium- This is one way of the policy to be given another source of payroll if the principal cannot pay due to a disability or critical illness.
These add-on options enable term plan insurance to be the first choice of the leaners for they can extract the special offers that suit them.
Financial Independence and Responsibilities
Unlike the preceding generations, millennial people crave financial independence. Many of them take loans to pursue education or buy a house or even initiate their own ventures. With these financial liabilities, securing the future of their families in case they die early would be very crucial. A term insurance calculator lets them know exactly how much they need to buy to pay their debts and fund their family during their absence. This generation also believes in planning for uncertainties, especially after witnessing economic crises, job instability, and global pandemics. Term plan insurance is a reliable safety net that ensures dependents do not struggle financially if something unexpected happens.
Awareness of Financial Planning at an Early Age
Far more aware than any previous generation, millennials are hooked up to the internet and social media. They follow financial blogs, influencer webinars, and up-to-date smart money management knowledge that has been disseminated to the public via the internet.
With increasing financial education, they will realize the concept of term plans and make sure to calculate with a term insurance calculator what they need, after considering the kind of income or lifestyle they need to lead with their future visions. Another valid reason for increased popularity among youth professionals is for this reason.
Tax Benefits under Section 80C and 10(10D)
Tax benefits are another reason to encourage millennials to invest in term plan insurance. The deductibility under Section 80C of the Income Tax Act is up to ₹1.5 lakh with the amount of premium paid. The nominee also gets relief from tax on the death benefit received under Section 10(10D).
Millenials are eager to minimize their tax liabilities. Therefore, they view term insurance as a strategic financial tool rather than an expense.
COVID-19 and the Value of Life Cover
The occurrence of the COVID-19 pandemic became an eye-opener for most young professionals; thus, the likelihood of untimely death was portrayed. Heightened awareness regarding health and financial security resulted in a large surge in purchasing term insurance. Millennials learned that life insurance is not the exclusive preserve of the elderly but rather a financial safety net for anyone.
With the advancement of remote working, gig economy jobs, and self-employment, traditional employer-provided life insurance is not considered sufficient enough. Therefore, millennials are turning to independence to make personal-term plans that ensure financial security for their family.
Conclusion
Millennials are redefining financial planning by prioritizing affordability, flexibility, and high-value financial products. Their preference for term plan insurance over traditional life insurance stems from a rational approach to wealth management and financial security.
With easy access to online comparisons, the ability to use a term insurance calculator, and a proper understanding of financial planning, millennials are making very informed decisions about their lifestyle and goals.
Now is the perfect time to plan for your future if you haven’t already and secure your future with a term plan to financially protect your loved ones.
