In our post on which insurance is better – term or whole life – we told you about what both consist of and which is better for you. However, once you have made the decision, the next critical decision can be tricky. That is, what should be the duration of your term insurance plan? That you need a term insurance for securing your family till the members are independent is known, hence, your policy period should be as long as to give your family the freedom to become financially independent.
Here are some of the important factors that affect your term insurance premiums:
The younger you are, the lower your premiums.
As a women, chances are you may get offers or discounts from companies as death risk is lower than men.
Premiums will be higher if your sum assured is higher as your coverage will also be more than usual.
If you are a non-smoker, you may get discounts on premiums.
The premium amount differs according to payouts. If you opt for increasing sum assured, your premium will increase over a period compared to level sum assured.
If the duration of protection opted by you is longer then your premium will be higher. This is one of the key factors determining your term insurance premium. The Term depends on how long you want to provide a financial protection to your family in case of unfortunate incidents.
Usually most insurance companies offer a policy term between 5 to 40 years. One should always opt for a policy term depending on their retirement age. It can vary of course. For instance, if you opt for 60 years as retirement age, there could be someone else who would opt for 65 as retirement age.
Why you should opt for a longer term:
- Fixed premium rates. Once the product is bought, the premium would remain same for the entire duration of the policy.
- If you are young, the premiums will be lower and will remain so throughout the term.
- You will remain insured – guaranteed -- for the entire policy term.
All that you need to do is to understand, for how long your liabilities will last. How soon your children will be independent, how long will you work etc. Most policy terms matures at the age of 65, you can decide the term of your plan as per your present age.
HDFC Life Click 2 Protect Life is a term insurance plan which ensures protection against the 3 eventualities of life - Death, Disability and Disease.
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"The thumb rule for retirement planning is - the earlier you start, the more you save. However, with age, your priorities change too. So, you need to factor in the cost of living in the present vis- a -vis future."
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