For many millennials, life insurance seems like an expense that can wait. With so many monthly commitments—rent, groceries, EMIs, and savings—life insurance premiums often feel like an unnecessary addition. But here’s the truth: life insurance is essential for safeguarding your family’s financial future, and it doesn’t have to drain your wallet. In this blog, we’ll explore some surprising and practical ways you can fit life insurance in budget without sacrificing other financial priorities.
1. Start Early to Lock in Low Premiums
One of the best ways to make life insurance affordable is to buy it early. Life insurance premiums are largely determined by your age and health at the time of purchase. The younger and healthier you are, the lower your premiums will be. Starting in your 20s or early 30s could save you thousands of rupees over the policy’s life.
For example, a 25-year-old buying a ₹1 crore term insurance plan could pay as little as ₹500 per month, while a 35-year-old could pay nearly double for the same coverage. Locking in a lower premium early not only ensures affordability but also provides lifelong security.
- Pro Tip: Don’t wait to buy life insurance. The longer you delay, the higher your premium will be. Even if you’re unsure of the amount of coverage you need, it’s better to start with a basic policy that you can expand later.
2. Opt for Term Insurance
If you’re on a tight budget, term insurance is the most affordable option. Unlike whole life or endowment policies that include an investment component, term insurance provides pure life cover for a fixed period. This makes term insurance much cheaper than other types of life insurance, allowing you to get a large sum assured at a low premium.
- Example: A term plan offering ₹1 crore coverage could cost as little as ₹500-₹700 per month for a young, healthy individual. This low cost makes it easy to fit into your monthly expenses while still providing substantial protection for your loved ones.
3. Use Annual Bonuses or Salary Hikes for Premiums
If managing a monthly premium feels like a stretch, consider using part of your annual bonus or salary increase to pay your life insurance premium. Instead of adjusting your monthly budget, you can set aside a portion of your bonus for your premium. This ensures that you’re covered without impacting your day-to-day expenses.
By making life insurance payments during bonus season, you won’t even feel the pinch throughout the rest of the year.
4. Choose a Longer Payment Term
Most life insurance policies offer flexible payment options. Instead of paying the premium monthly, you can opt for quarterly, semi-annual, or annual payment plans. Choosing a longer payment term could also offer discounts, saving you money in the long run.
For instance, paying your premium annually rather than monthly might earn you a discount of 2-3%, which could translate into significant savings over time.
5. Cut Back on Non-Essential Expenses
You’d be surprised how much you can save by trimming a few non-essential expenses. Small lifestyle changes, like reducing the number of times you order takeout or pausing a streaming subscription you rarely use, can free up enough money to cover a life insurance premium.
Here’s a quick exercise: list out all your monthly subscriptions and small luxuries. You might discover that a few hundred rupees saved here and there is all you need to fit life insurance into your budget.
6. Consider Buying Insurance Online
Did you know that buying life insurance online can be cheaper than purchasing through an agent? Many insurance companies offer discounts on premiums for policies bought directly from their website. These savings are passed on to the customer because online sales reduce the company’s operational and distribution costs.
In addition, comparing policies online allows you to pick the most affordable option tailored to your needs, saving both time and money.
7. Bundle Policies for Discounts
Many insurers offer discounts if you buy multiple policies from them. For example, if you already have health insurance, vehicle insurance, or home insurance, ask your provider if they offer a discount for bundling life insurance with your existing policies.
By combining your insurance needs under one provider, you can benefit from cost savings while ensuring that you and your family are fully protected across various aspects of your life.
8. Take Advantage of Tax Benefits
One of the lesser-known perks of life insurance is its tax benefits. In India, life insurance premiums qualify for tax deductions under Section 80C of the Income Tax Act, allowing you to deduct up to ₹1.5 lakhs per year from your taxable income. This effectively reduces the financial burden of paying premiums by saving you money on taxes.
- Pro Tip: Keep in mind that the maturity proceeds from a life insurance policy are also tax-free under Section 10(10D), which makes life insurance an even more attractive financial tool.
9. Customize Your Coverage
There’s no need to go for the highest sum assured right away if it strains your budget. Tailor your life insurance coverage to fit your current financial situation. Start with a sum assured that covers your immediate needs, such as outstanding loans or your family’s living expenses.
You can always upgrade your policy later as your income increases or your financial responsibilities grow. By customizing your coverage, you ensure that you’re not overpaying for a policy you don’t need right now.
10. Review Your Policy Periodically
Your life insurance needs will change over time, as will your financial circumstances. Periodically review your policy to ensure that it still aligns with your budget and coverage needs. If your financial situation improves, you can opt for a higher sum assured or add riders like critical illness coverage.
On the other hand, if you find that your premium is becoming difficult to manage, you can explore lowering your coverage temporarily until your financial situation stabilizes. Regularly reviewing your policy ensures that it continues to work for you, not against you.
Conclusion
Life insurance is an essential financial safety net, but it doesn’t have to strain your monthly budget. By taking a strategic approach—starting early, choosing term insurance, leveraging tax benefits, and making small lifestyle changes—you can protect your family’s future without sacrificing your current financial stability.
With these surprising ways to fit life insurance into your monthly budget, you can enjoy peace of mind knowing that your loved ones are protected, no matter what life throws your way.