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For how long should I buy the term insurance policy? This question often perplexes several prospective policyholders. It’s only natural because it is indeed tricky! This blog aims to help you make an informed decision after considering all the factors involved in choosing the right term period for term insurance policy.
When it comes to choosing a term insurance policy for you or your loved ones, there’s always one question that often takes long to think and answer (and sometimes even then you aren’t sure).
The word ‘right’ is often tricky here because there is really nothing that can clearly define right in this context. What may be considered the right term for one policyholder may be inadequate for another!
So, the question still remains: how to decide? In this post, we talk about some important factors to consider while deciding the duration of term insurance that we hope would help you make an informed choice.
Let’s first quickly understand the term insurance policy meaning and its benefit to the insured. As the name suggests, a term insurance policy insures the policyholder for a specific term or duration. It is also the simplest, most basic form of life insurance plan available.
In case of an untimely unfortunate demise of the insured under the policy, their family holders/nominees are entitled to receive a monetary death benefit. This amount is usually pre-determined by the insurer at the time of policy purchase and intends to provide financial support to the family of the insured in such difficult times.
In case of the death of the insured (if he/she was the primary earning member for the family), his sudden passing away would create a financial vacuum and burden in the household. Hence, getting covered by term insurance would help fill that vacuum.
This choice often gets difficult because different insurance providers offer different term durations for this insurance policy. The general term offered by several insurers is 5-40 years or until the age of 99. One should ideally choose a policy term after taking into consideration his/her age of retirement. It then becomes relatively easier to make an informed decision.
For instance, the general age of retirement for most people is 60 years. Accordingly, you may decide for how long a period you would need term insurance based on your current age. If you are currently in the age range of 20-40 years, it would make sense to choose a term period of 40 years for your term insurance plan or opt for a policy that covers you until the age of 99.
However, if you choose to buy term insurance at the age of 50 years, you may choose a lesser term period, say between 25 and 35 years or again until the age of 99. This is because financial liabilities generally tend to reduce around this time and hence, a lower term duration would also serve sufficient purpose of providing financial protection.
To further help simplify your decision, here are some important factors to bear in mind when opting for a term insurance policy:
We hope that the factors listed above will help you decide the duration for your term insurance plan. Note that your current age would play a very important role in determining the term period of the policy and that it’s advisable to purchase insurance when you’re younger to receive longer coverage. Besides, the term insurance policy calculator available online can help you figure out the exact amount of coverage you need in line with your requirements.
It’s a good idea to do a thorough research for finding out the best term insurance policy in India. There are several options available online and you can check out the details of the plan offered by each insurer before buying an online term insurance policy.
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