Should Young Couples Buy Life Insurance?

Young couples can benefit from purchasing life insurance early on, advised Tran Thi Mai Han, a financial planning expert at FIDT Investment and Asset Management JSC. By doing so, they can take advantage of lower premiums and ensure their insurability while in good health. However, it’s crucial to consider financial capabilities, and life insurance premiums should ideally range between 5-8% of annual income.

“Insufficient premiums may result in inadequate protection, failing to compensate for financial shortcomings in necessary situations,” explained Han. “On the other hand, excessively high premiums can burden the family financially and make it challenging to maintain long-term life insurance.”

When it comes to policy benefits, Han suggested that it depends on the products offered by different insurance companies. Typically, a life insurance policy includes primary benefits such as death and permanent total disability benefits, along with supplementary benefits like critical illness, accident, hospitalization, and premium waiver benefits.

The benefits that should be prioritized are those that cover significant events like death, permanent total disability, and critical illness. Following that, hospitalization, private room, and premium healthcare service benefits are also essential. Additionally, as income increases, customers can consider purchasing additional health insurance to cover medical expenses and hospitalization costs.

Le Anh, a long-time insurance consultant in Hanoi, emphasized the importance of young couples purchasing life insurance early. “The earlier you buy life insurance, the better, as premiums will be lower, and there will be fewer exclusions,” she said. However, she reminded that buying insurance is a long-term commitment, and financial considerations are crucial in choosing the right plan.

For couples with a combined income of 70-100 million VND per month, Le Anh suggested opting for a higher-end financial package, with premiums ranging from 10-15% of their monthly income. This package would include benefits for critical illness coverage, healthcare, and premium waiver support, ensuring financial stability in the event of the husband’s critical illness or premature death.

For those with lower incomes, term life insurance is a more affordable option, providing death benefits to beneficiaries. Term insurance policies typically have durations of 10, 15, 20, 25, or 30 years, and shorter-term policies tend to be more affordable. However, renewing a shorter-term policy may result in higher long-term costs.

“With a 30-year term, you’ll pay slightly higher premiums than a 10-year term,” Le Anh explained. “If you renew a 10-year term after it expires, you may end up paying more than you would have with a 30-year term, as premiums increase with age when taking out new policies.”

Additionally, for couples with limited financial means, Le Anh suggested the option of purchasing a single joint life insurance policy, where the primary breadwinner (either spouse) is the insured person. “This approach protects the breadwinner from risks and also provides critical illness and healthcare benefits for the other spouse,” she shared.

Nguyen Thuy Anh, a long-time insurance customer, shared her experience: “My husband and I bought insurance quite early, around 2005, when insurance wasn’t as popular as it is now. We each bought a policy worth 10 million VND, paying for 15 years, which equated to 10% of our combined annual income.”

About a year after purchasing the insurance, Thuy Anh’s husband was involved in a severe traffic accident and had to be hospitalized for a month. With daily expenses, including bed fees, hospital fees, and medication, totaling 2 million VND, having insurance alleviated a significant financial burden.

“Buying insurance is about risk prevention,” Thuy Anh emphasized. “For my husband and me, it’s like a mandatory savings account for ourselves, and it helps ease financial burdens when accidents happen.”

According to experts, when purchasing insurance, it’s crucial to ensure that the insurance agent provides comprehensive and clear advice on the terms and conditions, rules, and benefits of the desired product. If the agent’s answers are unclear, you can ask them to provide legal grounds for their responses. Additionally, it’s essential to disclose all relevant information about your health and personal details accurately and truthfully, as misrepresentations can lead to the policy being declared void and non-payable.

Most importantly, customers must fill out all the necessary paperwork and sign all pages of the insurance contract themselves, without relying on the insurance agent to do so on their behalf.