Are you planning to study abroad? Make sure you get a life insurance policy first

Life insurance is a must for most individuals. In fact, some even suggest that students who expect to have dependents soon get insurance early.

However, buying a life insurance policy, especially term insurance, is not so easy for students. Term insurance generally provides significant coverage at a relatively cheaper price.

Do College Students Need Life Insurance?

Contrary to popular belief, insurance is mandatory for anyone with financially dependents. Students generally do not consider life Insurance or financial planning seriously due to their lack of knowledge in this area.

Many students go abroad for higher education. Existing insurance coverage would provide some cushion to the family back home, as obtaining insurance coverage in another country may not be easy.

“If the policy is taken out and the risk accepted in India, the policy remains valid even if the student moves to another country to study,” explains Karthik Raman, Chief Marketing Officer and Head of Products, Ageas Federal Life Insurance.

Additionally, students who take out a college loan for higher education and plan to repay the loan on their own can take out coverage equal to the loan amount to ensure that the burden does not fall on parents or guardians in case of misfortune.

Nitin Mehta, Chief Customer Officer, Bharti AXA Life Insurance, said: “Students or people with no or less income can be covered by some government schemes which require very minimal investment. Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJBY) is one such scheme where parents or grandparents pay the premium and children are insured for life. »

Experts say buying Insurance at a young age ensures that the contribution rate is low.

“One of the main reasons for buying a life insurance policy early is that the cost of insurance increases with age. The premiums a student will pay at an age of, say, 18 , will be much lower than what he will pay at age 35,” says Yogesh Aggrawal, founder of Onsurity, a health technology and insurance company.

“The premiums a student will pay at age, say, 18, will be much lower than the premiums they will pay at age 35.”

What challenges do students face when buying insurance?

One of the biggest hurdles for college students buying life insurance is that many of them don’t have a suitable source of income.

Purchasing life insurance is a straightforward process, but income is an important criteria that insurers assess before issuing a policy. This is because the underlying concept of life insurance is to replace the breadwinner’s income in the event of death. Insurers therefore often use the criterion of income to assess the amount of the sum insured.

“A person must have proof of legitimate income in order to take out a term insurance policy. In order to avail a term insurance policy, one must have income and proof,” says Sajja Praveen Chowdary, Chief Executive Officer. company, term life insurance, Policybazaar.com, an insurance aggregator.

How can students get life insurance?

Students who have a source of income, even if not from a regular source, and who are self-employed in nature, may be eligible to purchase a policy. However, insurers cannot add multiple sources of income to provide broader coverage.

“Term insurance can be obtained if the income they earn from one source is sufficient to satisfy the insurer’s minimum income requirement. A sum of all income sources will not be considered proof of income. says Chowdary, adding that proof of RTI filed can be used to show proof of income.

Also, purchasing insurance policies other than term coverage may be easier, as the coverage amount of such policies is generally lower for the same premium amount.

According to Akshay Dhand, appointed actuary at Canara HSBC Life Insurance, “Generally, students with no or less income will not get any long-term plan, and if they do, most companies will provide them with very little sum insured. However, these people can opt for savings plans offered by life insurance companies. This suffices at least for the requirement of life insurance for these people until such time as they begin to earn an active income.

Another option is for parents or guardians to take out a policy in the student’s name. Here, the premium amount will be paid by the parent or guardian and the policy will be in the name of the child.

“For these people, the policy holder will be the parent or a grandparent, who will fund the premiums, but the policy will cover the rest of these people’s lives,” Dhand says.

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