We are a newly married couple in our mid-20s. How early should we buy life insurance?

We are a newly married couple in our mid-20s eager to create a well-structured financial portfolio that aligns with our life milestones and ambitions. Our combined monthly income is Rs 1.5 lakh. We wanted advice on how early we should buy life insurance. Are there any policies where we can get maturity proceeds, or can we start a few years later? 

By Akshay Dhand, Appointed Actuary, Canara HSBC Life Insurance 

As a newly married couple in your mid-20s, it is good to think about the future filled with career growth, mortgages, starting a family, and other exciting milestones. Managing these needs urgently demands the creation of a solid, well-structured financial portfolio. With your combined monthly income at Rs 1.5 lakh, you are at a significant economic advantage to start this journey and achieve your financial goals and ambitions. 

One financial investment you should highly consider is Life Insurance. The question often arises: ‘How early should we buy life insurance?’ The short answer to this is as soon as possible, yet you will need to understand the reasons behind this strategy completely. 

Life insurance becomes more expensive as you age due to the increased health risks. Hence, purchasing it when you're young and presumably healthy equates to reduced premium costs. Acquiring life insurance early also ensures financial security for your partner in an unfortunate event. 

Different types of life insurance policies serve various purposes. For instance, Term Insurance offers death risk coverage for a specific period. However, it does not provide maturity benefits if the insured outlives the policy term. On the other hand, you may consider policies such as Endowment Plans or Unit-Linked Insurance Plans (ULIPs), which provide a death benefit and a maturity benefit if the insured outlives the policy term. 

The whole life or endowment plans come with long-term savings and investment benefits. Starting early allows your policy more time to accumulate cash value, offering potential financial gains in the future. Furthermore, life insurance can cover any outstanding loans or debts, easing potential financial burdens on your family. 

However, getting life insurance doesn’t equate to an early retirement plan. It secures your loved one’s financial well-being in your absence, providing a safety net. 

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Strike a balance in your portfolio, including investments offering risk cover and wealth creation opportunities. Remember that life insurance is just one facet of a comprehensive financial plan that should include savings, investments, and retirement plans that align with your life's milestones and aspirations. 

Financial planning is not a one-size-fits-all scenario. It demands personalized strategies reflecting your lifestyle, financial goals, and risk tolerance. As a young couple with a decent income, making wise, timely decisions will make it easier for you to achieve your financial milestones. Also, look for other financial avenues to build a corpus for retirement and other financial goals. 

This way, defining your long-term goals will guide you in choosing the right life insurance coverage for your future endeavours. 

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)