Being a student usually means that your biggest financial priorities are education, living expenses and building a career. Life insurance may not be something you have thought about yet. After all, if you are young, have no major financial responsibilities and are still dependent on your parents, why would you need a term insurance policy? In most cases, a student may not need term insurance immediately. However, there are situations where having life cover can make sense, especially if you have taken an education loan, have started earning while studying, or have financial dependents.
What is Term Insurance for Students?
Term insurance is a type of life insurance plan that provides coverage for a specified period. In case of death of the policyholder during the policy term, the insurer will pay the death benefit called Sum Assured on Death to the nominee.
The purpose of term insurance for students is not generally to build savings or to earn returns. It is meant to provide financial help to the family or other people who might have to bear the financial burden in case of the student’s death.
Young people generally have fewer financial commitments and may not require a large term insurance cover.
Do Students Really Need Term Insurance?
If you are a student who does not earn, has no outstanding loans and is financially dependent on your parents, buying term insurance may not be a priority. Your parents are usually supporting your education and living expenses, so there may not be a significant financial liability for your family arising from your death.
The situation can be different if you have financial commitments of your own. If any of the scenarios below apply to you, it may be worth comparing plans through Policybazaar term insurance to see what cover and premiums you’d actually qualify for.
For example, you may want to consider term insurance if:
- You have an education loan in your name.
- You are earning through a job, freelancing or a business while studying.
- Your family depends partly on your income.
- You have taken a loan that your parents or another family member may have to repay if you die.
- You have financial responsibilities towards a spouse, child or another dependant.
- You want to lock in life insurance at a young age after becoming financially independent.
So, being a student alone does not determine whether you need term insurance. Your financial responsibilities matter more.
When Should a Student Consider Term Insurance?
- If You Have an Education Loan
The balance can still fall due even if the borrower dies. A payout can cover it, but check who’s actually liable for repayment before buying.
- If You Have Started Earning
If your income already supports your family, losing it would leave a gap. That’s the gap term insurance covers.
- If Someone Depends on Your Income
Student or not, if a parent, spouse, or anyone else relies on your income, that’s worth insuring.
- If You Are Financially Independent
Buying young usually means cheaper premiums, but don’t buy just because it’s cheap, size the cover to your actual responsibilities.
How Much Term Insurance Does a Student Need?
There is no standard amount of term insurance that every student should buy.
If your main reason for purchasing the policy is an education loan, the outstanding loan and your family’s ability to repay it should be considered. If you are earning and have dependants, your income, future financial needs, outstanding loans and the financial needs of your dependants become more important when deciding the coverage amount.
Buying a very high cover simply because it is available at a low premium may not make sense if you currently have limited financial responsibilities.
Is It Cheaper to Buy Term Insurance at a Young Age?
Generally, age is one of the factors insurers consider when calculating term insurance premiums. Younger applicants may be offered lower premiums than older applicants, assuming similar coverage and other factors.
But cheaper does not automatically mean necessary.
If you have no financial dependents or liabilities today, buying a policy solely because the premium is low may not be the best use of your money. Your insurance needs can change significantly once you start working, get married, take a home loan or become responsible for your family’s expenses.
So, Should a Student Buy Term Insurance?
For many students who have no income, loans or dependents, term insurance may not be a priority. But, if you have an education loan, a steady income or people who depend on you financially, you might want to look into life insurance.
Choice should be based on financial responsibility, not age or student status. As you progress in your career, and as your responsibilities grow, you can review your life insurance needs and up your coverage as needed.
