There is no right or wrong time to consider buying life insurance as long as you understand the costs and benefits.

However, you should always buy insurance at a young age when the premium for all types of policies tend to be low.

In risk cover policies, the premium amount is lower for a given sum assured for a young person as the mortality charges are low.

Similarly, in savings and investment type policies, also known as wealth accumulation plans, the installment sizes will be small because of a longer policy term while the advantage of compounding will increase returns.

Normally, at a young age, the period of dependence of the loved ones are relatively long even as the income is not high. It is better to buy an insurance policy of a higher cover at a young age as one’s human-life value is higher because the buyer’s balance span of earning years is longer.

When properly bought, one gets adequate cover at a reasonable price at a younger age, which ensures the policyholder has acquired “peace of mind” at a reasonable price — one of the main reasons why most of us buy a life insurance policy.

Spread out

Both the insured and the insurer justly expect a long life and so the premiums are spread out. The premium rates spread out the risk over the expected years of life for a particular age group.

At an older age the premium will be higher even if one is fit because of the lesser number of earning years over which the premiums can be spread.

When one delays the decision of buying a life insurance policy, there is always a risk of being diagnosed with some disease or health condition at a higher age.

Under such circumstances. the policy application may either be rejected or the premium will be considerably high. Therefore, it makes sense to buy insurance when one is young and fit.

Fixed for life

The premium once fixed remains the same throughout the term of the policy.

With life expectancy rising, the premium for a life insurance policy can be very low.

Further, at a young age, major health issues are unlikely. So, chances of getting a life insurance policy at a young age are easier. In this way, you can avoid remaining uncovered at a later age should there be a diagnosis of any disease or any other medical problems which are likely to shorten life.

At a young age, most insurance companies provide insurance cover to customers without any or much medical check-ups.

As the age increases, the medical check-ups become mandatory. The process of acquiring cover also becomes more complex. It may also happen that an applicant may not get cover from any insurance company at a later age.

Once a company issues a policy to an individual, it cannot refuse a renewal to the customer. So, if an insured joins early, he/she will have coverage for a lifetime.

In mediclaim policies, if customers enroll into a policy early, they will have coverage for all diseases later in life when they need it the most.

Collateral asset

Sometimes, one can find oneself in an emergency situation that requires funds that one may not readily have.

You can borrow against some insurance policies if you find yourself in a difficult financial situation.

Most lenders accept life insurance policies as collaterals for mortgages.

At the time of premium payment, policyholders get income tax benefit under Section 80C. The claim proceeds from an insurance policy is also exempt under Section 10(10D) of the Income Tax Act, 1961. This adds to the attraction of acquiring a life insurance policy early.

The author is CEO of Edelweiss Tokio Life Insurance