Most 20-somethings are left without an answer when their parents question them on how they are planning their finances. As the payday draws nearer every month, plans keep building up. It may be a night out at the best pub in town, a long-awaited meal at the gourmet restaurant, the fancy phone or just a movie. Hardly a thought is spared towards building a comfortable and a secure future. Thinking about the future may be a wise thing to do but very few do it. If you are a twenty-something and you have expensive retirement goals, you must start planning your finances right away. It is a great idea to start saving as soon as you attain financial independence.

Setting Financial Goals Early
If you have a goal in mind it is easier to save. One big mistake that 20-somethings make is not setting a budget aside. The real reason they cannot save is because they are clueless about how much they have spent and what their budget limit should be. Most young adults try to fit in their peer group which can cost a lot of money. Before you cave in to the peer pressure, it is necessary that you weigh the odds. In order to manage money right, you must have a clear picture of the financial schemes. You can start exploring the options today and start saving without further loss of time. One investment option which you can explore is insurance.

Why Should Youngsters Think About Life Insurance?
Most young Indians do not think about life insurance policy, but they should. Life insurance is that ultimate tool for those moments when you want your loved ones to be financially protected. You may have a large debt from an education loan or your spouse or children may be relying on your income. They could depend on the insurance policy if something unfortunate happens to you suddenly. Insurance is always cheaper for a younger person when compared to an older person. This indicates that you can avail the insurance benefits at a much lesser cost. Apart from death benefit, insurance policies also provide support for medical conditions like cancer.

Insurance Acts as a Boon for Those Who Start Early
Insurance is a boon if you start early. When you are twenty and you buy a policy for 30 years, your premium will remain the same for the next 30 years. However, if you decide to wait for 15 years and then buy the policy, you will be paying a higher premium for the entire term of the policy. When you decide on an endowment plan or a ULIP early on, your portfolio will gain from the power of compounding. Additionally, the premium which you pay towards life insurance is tax deductible. There are annual limits to the deductions and the provisions vary according to the Income Tax Act.

Premiums Rise with Age
It is important to note that as you grow older, chances of ailments rise. As you age, your health will deteriorate and your rate of premium will increase. The longer you put off the decision to buy insurance, the more it is going to cost you. If your health is not at par with the terms of the insurance company, you may not be able to purchase the insurance policy. When it comes to life insurance, most of the Indians are under-insured and they are not aware of it.

Save the Trouble of Prequalification Tests
Let’s say that you are a 25 years old man with a decent job who wants to secure a life or health insurance. You may not be aware but the chances are high that the insurance company will not mandate necessary medical tests just to prove that you are healthy. This saves you the trouble of going through prequalification tests. In most cases a doctor specifying that you are in good health in enough. This, however, may be an exception if you have a pre-existing disease.

Insurance Plans You Must Have in Your Portfolio
Let’s take a look at the insurance plans which you must have in your insurance portfolio:
1. Life insurance (Preferably Endowment Plan)
2. Health Insurance
3. Personal Accident Cover/ Disability Cover
4. Home Insurance
5. Motor Insurance

Why Are Endowment Plans Recommended to Youngsters?
If youngsters were to ask their parents about the insurance policies which they should purchase, most likely the answer is going to be endowment plans. These plans are a good option for those who want to play it safe. The policy holder has to pay the premium for a specified tenure and at the end of the term the maturity proceeds are paid out. The maturity proceeds include the sum assured and the bonuses which you earn over the years. The long duration of the plan may pin you down for a long tenure but the positive side is that there are forced savings. This works to the advantage of the policyholder. It helps create wealth which can be used to meet financial goals, some of which can be long term. This policy is recommended for a young person as the premiums are low but the returns are higher. Further, once you start this plan it is difficult to stop owing to the high surrender charges. This implies that a policyholder in all likelihood will see through its course, which is ultimately beneficial.

About Endowment Plans
Endowment plans should be bought by youngsters to protect their loved ones, for goal-based savings or to fulfill an objective over a long period. It is a disciplined way of saving money for future financial needs. At times, tax benefits subject to certain conditions are available on the returns. The policyholder qualifies for the maturity amount if he survives the policy term. Like other plans, a plethora of endowment plans is available in the market today. Your choice of the plan should depend on your risk appetite, income, individual need and the current life stage. In case of these plans, it is essential that you check the premium rates.

When you are in your twenties, you may have your education loan to repay, high credit balances and lots of debt. But at the same time there are solid reasons to get yourself insured. The advantages of saving money on a systematic basis are many, and you will find its benefits in the long run.