The COVID-19 pandemic has completely changed the way Indian millennials see financial planning. There is now a clear shift in how millennials approach their life insurance plan choices. The new reality has accelerated awareness around securing health, wealth, and family future. With uncertainty looming large, millennials are choosing between various types of life insurance that suit their priorities, budgets, and lifestyle. This comprehensive guide breaks down these choices, explains their benefits, and acts as a trusted resource for anyone looking to understand life insurance plan options suited for young Indians today.
Why millennials need a life insurance plan more than ever
India has a median age of just under 29 years as per Census data. A huge population of working millennials now support their families and carry financial responsibilities. The pandemic’s impact highlighted the fragility of life and income, making insurance no longer a luxury, but a necessity. Life insurance not only acts as a safety net but also provides powerful tools for wealth accumulation and future planning.
A good life insurance plan can pay off debts, support dependants, fund children’s education or marriage, and even serve as collateral for loans against securities. Understanding the types of life insurance available is important as products have evolved to match changing lifestyles and aspirations of Indians under 35.
Factors driving millennial choices for insurance
Several trends explain why millennials are now more proactive about their life cover, Here are a few of the most integral ones:
- Rise in lifestyle diseases: India is seeing early onset of diabetes and cardiac illness among the young.
- Increased financial literacy: Better access to online financial education and mutual funds advisory platforms.
- Flexibility requirements: Millennials prefer insurance that matches career switches and entrepreneurial journeys.
- Digitisation: Hassle-free online applications and quicker claim settlements encourage adoption.
- Affordability: The awareness that small, regular premiums can create a sizeable cover and corpus.
Types of life insurance plans millennials prefer
Modern life insurance is no longer one-size-fits-all. Below is a detailed look at the types of life insurance plan that are most popular among Indian millennials.
Term insurance plans
Term insurance is the purest and simplest form of a life insurance plan. It provides financial protection to the policyholder’s family in case of untimely demise during the policy term.
Why millennials prefer term insurance
Many millennials see term plans as value-for-money. Rs. 1 crore cover can cost very little annually for young, healthy individuals. Online policy application and instant claim settlement make this the top choice for financial security.
Unit Linked Insurance Plans
ULIPs combine life cover with an opportunity to grow wealth through market-linked investments.
Why millennials choose ULIPs
This types of life insurance appeals to millennials interested in mutual funds and equities. ULIPs offer transparency, flexibility, and dual advantage of insurance and investment. They help in goal-based planning, such as building wealth for a house or child’s education.
Endowment plans
Endowment plans provide dual benefit—life cover and guaranteed maturity payouts irrespective of market volatility.
Millennial attraction to endowment plans
For millennials who are risk-averse and prefer stable returns, endowment plans are ideal. They help in disciplined saving for long-term needs, such as retirement or major milestones.
Whole life insurance plans
Whole life policies provide protection for the entire lifetime, generally up to 99 or 100 years.
Why millennials consider whole life insurance
Increasingly, millennials with high-value assets or family business backgrounds see the value in lifelong protection. It helps in succession planning and is a solid tool for wealth transfer.
Group insurance plans
With startups and corporates focused on employee welfare, group life insurance plans now offer affordable cover to young professionals.
Growth in group insurance
The post-pandemic era saw young employees demanding comprehensive benefits from employers. Startups now offer higher sum assured plans and improved critical illness riders to retain millennial talent.
Important add-ons with life insurance for millennials
Life insurance plans come with useful riders. These add-ons provide extra protection and are popular among young policyholders.
- Critical illness rider: Lump-sum payout on diagnosis of critical illnesses.
- Accidental death benefit rider: Enhanced cover if the policyholder dies in an accident.
- Waiver of premium: Future premiums waived in case of disability or critical illness, without losing policy benefits.
- Income benefit rider: Family receives regular monthly income after policyholder’s demise.
Choosing the right rider makes a life insurance plan more comprehensive, covering unexpected medical and financial emergencies.
The role of tax benefits and long-term planning
Tax efficiency is a top priority for working millennials. Most types of life insurance provide tax benefits under several sections of the Income Tax Act, 1961.
- Section 80C: Premiums up to Rs. 1.5 lakh per year are tax-deductible.
- Section 10(10D): Death benefit and most maturity amounts are tax-free.
- Section 80D: Health insurance add-ons like critical illness rider add further deductions.
Millennials are utilising these advantages to lower tax outgo, while meeting life goals through smart insurance planning.
Key aspects to consider while choosing the right life insurance plan
When selecting among types of life insurance, millennials should look at these aspects:
- Coverage amount: The sum assured should be at least 10–15 times your annual income.
- Premium affordability: Choose a policy with regular, manageable payments for the longest possible term.
- Claim settlement ratio: Opt for insurers with high claim settlement rates as per IRDAI reports.
- Policy features: Check for necessary riders and flexibility in premium payments.
- Digital access: Prefer plans with easy online management and support.
Thorough research and professional advice brings peace of mind and long-lasting benefits.
Life insurance and wealth creation
Milennials now demand more than simple risk cover. With a variety of types of life insurance, one can use insurance as an effective wealth-building tool. Features like guaranteed returns, market participation, regular income, and survival benefits are being woven into insurance products. This helps young policyholders build a disciplined, tax-efficient corpus, supporting their family’s medium and long-term goals.
Life insurance as collateral
Insurance plans are also accepted as collateral for loans against securities by Indian banks and NBFCs. This means policyholders can easily access funds during emergencies or to seize investment opportunities, without breaking their long-term saving discipline.
Conclusion
The post-pandemic era has cemented the importance of safeguarding health, income, and the future. Millennials in India now see a life insurance plan as a crucial part of financial planning and wealth creation. Be it is term insurance, ULIPs, endowment, whole life, or money-back, the types of life insurance available today suit every risk appetite and future goal. By understanding features and aligning with personal objectives, millennials secure peace of mind for themselves and their loved ones.
Selecting the right life insurance plan, with suitable add-ons and tax efficiency, builds not only a financial cushion, but also supports aspirations for a brighter tomorrow. In an ever-changing world, informed choices today make all the difference for millennials across India.
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