Term Insurance: Should You Buy One During Your First Job

When you start working, your income may be limited, and the question of whether you need term insurance is valid. There is a school of thought that says that you do not need term insurance when you have no dependents and have no financial responsibilities like education loans. However, when you have taken on debts and have dependents, term insurance is a must. 

However, the affordable premiums associated with being young and healthy are a benefit to young professionals who purchase term insurance early. A policy taken out at a young age maintains its low premium throughout the policy duration, regardless of escalated health risks associated with ageing. Moreover, early policies provide protection against the financial risks of dependents or cosigned student loans. 

“In the long run, these low-cost policies provide protective coverage that improves comprehensive risk management and strategic financial planning. The savings that come with lower premiums can be invested, subsequently, exponentially stimulating wealth. In conclusion, early adopters of term insurance are provided with an excellent financial protective solution,” says Aditya Mall, Appointed Actuary at Future Generali India Life Insurance. 

Yes, in most cases, the cover amount in term insurance can be increased either using a new policy or by a term known as “life stage benefit,” which some plans offer, as income and responsibilities increase. 

“This enables the policy owner to increase their sum assured during critical life milestones like weddings, childbirth, or career progression without the need for additional medical examinations. These benefits support adjusting coverage to fit changing financial demands. Nonetheless, increased coverage similarly leads to higher premiums over time,” says Mall. 

Select policies ensure that coverage is adjusted to keep pace with lifestyle inflation, prospective liabilities, and the financial needs of dependents.

The primary riders (add-ons) for term insurance that an individual can opt for at the beginning of a career are: critical illness rider, accidental death benefit rider, and waiver of premium rider. The critical illness rider protects a policyholder’s savings by paying a lump sum at the diagnosis of major illnesses. “The accidental death rider pays a higher amount if death occurs because of an accident, while the waiver of premium rider does not require payments to the policy in case of disability or loss of job. These add-ons greatly improve base protection at relatively low prices, allowing younger workers to gain full protection early into their career without greatly affecting their income,” says Mall.