Should I Consider Buying A Life Insurance Plan if I am Single?

Graduating from University and taking up the first job is one of the happiest moments for any individual as it marks the beginning of financially independent life. The icing on the cake, if you bag an offer to work in a blue-chip major or a public sector behemoth. You start a new journey that is no longer as linear as it used to be until you completed graduate studies. You have your plans, strategies, aspirations and ambitions to make it big in life, buy that dream house, raise a family, travel around the world and retire like a King.

With money comes a desire to spend on materialistic comforts and latent desires. In the hullabaloo of life, there arises a common conundrum-should you buy life insurance policy? After all, you are single without any commitments.

The Single Person’s Dilemma

Some of the thoughts crossing your mind:

1. Do I really need life cover if I’m single?
   
   
2. How much life insurance do I need if I am single?
   
   
3. What are the benefits of life insurance for singles?
   
   
4. Is life insurance for singles available?

Why Do You Need Life Cover While You Are Single?

Life Insurance is always planned for the long-term and to mitigate against risks that may arise in the unforeseen future. If you are single and Gen-Z, the following reasons should get you thinking about life insurance policy and its importance in your investment portfolio.

• Financially Dependant Parents- Your parents worked hard all their lives to give you the best possible education. They spent a significant portion of their incomes to help you reach where you are today. Although they may not say it directly, it is possible that they are not financially stable. They hope that you will take care of them in their sunset years.
  But what if the almighty has some other plans in store and you do not live long to handhold them. A life insurance policy guarantees the Sum Assured to them so that they can make ends meet even in grief.
• Age Advantage - The premiums payable on Insurance Policies depends on age and health condition. As you age, the cost of buying a policy will increase significantly. If you are currently 25 and single and decide to defer buying an insurance policy until you marry at say, 40, you will probably end up paying much more.
• Ailments - Deferring purchase decisions has another drawback. If you develop some ailments by then, you may run the risk of either not getting covered by life insurance or being charged significantly higher than normal.
• Protection for Future Family- Life happens! Even if you are determined to stay single, your decision may change at a later stage in life. You may regret not being able to financially secure your family in case you are considered ineligible for an Insurance Policy as per actuarial norms.
  
• Financial Liabilities- Take the case of Arjun who availed a home loan of ₹ 25 Lakhs at the age of 28, got married at 30 and unfortunately died at 34. If the home loan is not covered by life insurance, the bank can attach/auction the property and recover the dues. If it is covered by life insurance, the insurance company would pay the outstanding dues and therefore Arjun’s family will not be displaced.
  
• Tax Benefits- Amount paid towards premiums are deductible, under section 80C, from your taxable income. 

Learn how does life insurance help in saving tax.

How Much Life Cover Do You Need When You Are Single?

The magnitude of life insurance depends on the insurable interest of the nominee. If Rakesh, aged about 30 years, earns ₹ 15 lakhs per annum, his family will stop getting that income in case of Rakesh’ untimely demise. A simple thumb rule states that the Sum Assured in a life insurance policy should be around 10-15 times the annual income.

The underlying logic is simple. 10-15 times the annual income gives 10-15 years to the family to strengthen alternative sources of income. For example, the spouse may pick up new skills and start earning or children may grow up and become financially independent etc. In the above example, Rakesh should opt for a cover of approximately ₹ 1.5 Crores to ₹ 2.25 Crores.

Which Type of Life Insurance Plan Should You Buy When You Are Single?

The type of life insurance depends on each person’s circumstances, aspirations and affordability. Some of the most comprehensive policies offered by insurers with a rich legacy such as Canara HSBC Life Insurance are listed below:

1. Term Life Insurance: Online term life insurance plans like iSelect Smart360 Term Plan offer some amazing features for you to offer adequate financial safety and prepare for your future as well:
   
   
   • Increasing Cover Option: As your income will grow, for the first decade of your life your lifestyle and responsibilities will continue to grow with your income. With these, your life cover need will also grow. The iSelect Smart360 Term Plan allows you to choose one of the following options to ensure, that your term cover keeps up with your growth:
     
     
     • Steady growth: The life cover automatically grows every year until it doubles.
       
     • Life-Stage Increment: Request for higher sum assured at crucial stages in your life:
       
       
       1. Marriage
       2. Childbirth
       3. Home purchase
       4. Whole life coverage

     At a young age your premium could be low enough for you to consider a 99-year cover. Have the financial protection as well as prepare for the legacy for the next generation.

   • Pay Till 60 Option : Select the premium paying term so that you pay only for a defined period such as before retirement.

There is also a return of premium option that gives all your paid premiums back at the end of the policy tenure. The best part is the increasing life cover option that is best suited for single/unmarried individuals. The life cover can be increased at appropriate life stages so that the individual gets the best of both worlds.

2. For Retirement Savings & Wealth Creation: Promise4Growth Plus is a comprehensive plan that empowers you with both wealth creation and life cover. This combination gives you solid control over your investments and insurance requirements. Some salient highlights:
   • You have the option to invest in equity, debt, balanced and liquid funds simultaneously.
   • Multiple portfolio management strategies ensure that you can manage your portfolio without regular involvement.
   • Loyalty additions and wealth boosters ensure you get a superior return on investment.
   • The systematic withdrawal option is very lucrative because it provides a safety cushion during financial emergencies.
3. Savings For Short-Term Goals : Saving to fulfil your short-term financial goals and lifestyle goals is also important. Although nowadays borrowing is a common theme for the new earning members of the society, you can take a better path.

While borrowing will afford you assets like a car or expensive electronics sooner, they cost far more with borrowed money. But if you save for these goals, you not only end up with more money, but you also have better choices for products. Especially when the saving plan can offer tax-free maturity value and savings.

The Promise4Growth Plus from Canara HSBC Life Insurance, provides the perfect solution for you. The plan gives you the option for partial withdrawals once the five-year lock-in period ends. Thus, while you continue to save, you can simultaneously use part of the savings to fulfil your wishes.

Life Insurance should be availed when you do not need it, because you may not get it when you need it the most. There is no “right” age to buy an insurance policy, but the benefits of signing up early are tremendous. Life Insurance should be a priority if you wish that your family never struggle for money.