Term Insurance Plans

The tenure of your term plan is as important as the amount of premium you pay. The longer the period of term insurance policy, greater will be the policy’s annual premium. If you keep the period too short, there are chances that you would be without a cover in a period when your loved ones will still need financial protection. Therefore, it makes sense to consider important factors like the tenure of your term plan when you are buying a term plan in India.

Objective: The function of life insurance is to help your family members meet their regular expenses and future needs even in your absence. Therefore, the ideal term of term insurance policies should end at a time when you have met all your life goals and saved enough for retirement.

Consider tenure till retirement: It is typically difficult for you early in life to determine till when you will have accumulated enough savings to take care of all your needs for the rest of your life. This is the time when you will not need life insurance coverage. Since many of your large expenses such as your child’s higher education and marriage are likely to happen in your 40s and 50s, it makes sense to have your life insurance coverage all the way upto your retirement at the age of 58 or 60.

Of course, there are people who aspire to, and there are some who actually do, retire much earlier, say, in their 40s. The guiding principle remains the same. You keep the life cover as long as you don’t have enough savings to take care of you and your family for the rest of your life.

Why taking the longest tenure, early in life makes sense A smart approach is to buy a term plan early on in life, opting for the longest possible coverage. This ensures you benefit from the low premium during the long tenure of the plan. For instance, at the age of 25 you can take a term of 40 years as it would last till age 65. In this case, you would enjoy the low premium till the end of the term. Of course, as your income increases and lifestyle gets enhanced, besides you taking up loans, to cover all of them, you will need to periodically enhance your life insurance cover.

To sum it up, it is not only important for you to have adequate life insurance coverage but also to ensure that it stays that way till the time your family needs it. It is your responsibility to ensure that your family is financially prepared to face any eventuality.