Should one invest in a 40-year term insurance policy?
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Most of us would like to believe that we will live a long life. But what if your lifespan is not as much? What will happen to your family if you are gone? These may sound negative but these are pertinent questions that must be answered. Of course, we want to be around for our families in every possible way, but that can only happen if we make wise financial decisions. If safeguarding your loved ones is your priority, there’s no better solution than a term insurance plan.
But what duration should you go for? If you want to offer a layer of security to your dependents in the long run, don’t think twice before purchasing a term insurance plan that covers you for 40 years. Once you invest in this policy, your family members will receive a death benefit in case you die during the policy term. The benefit is not applicable after the policy term ends, unless of course, you have opted for a plan with Return of Premium option, which allows policyholders to reap the maturity benefit if they survive the entire policy tenure.
How does a term policy with a 40-year period work?
It works like any other term insurance policy. The death benefit is only applicable if you pay your premiums on time. If you don’t, your policy stands a chance to get canceled after a particular grace period. So, don’t be laidback about this and make payments on time.
The benefits of a 40-year term insurance policy
If you’re planning to purchase a 40-year term insurance policy, here are a few benefits you should be aware of:
- Security for 40 years to the policyholder’s family, offering peace of mind. You can also opt for this policy if you are planning a family
- Death benefit offered to the family; in case of death of the life assured during the policy term. It could be natural death, death by accident, or death due to critical illness. Suicide is not covered for the first 12 months of the policy period. Also, deaths due to driving under the influence of drugs or alcohol are not covered by term insurance, nor are deaths caused by participation in hazardous activities, adventure sports or illegal activities. Deaths occurring due to pregnancy, childbirth or pre-existing health conditions are not covered as well.
- Also works as income after retirement for the assured member’s family
- Helps in planning future financial needs
- Income tax benefit under Section 80C of the Income Tax Act*as well as tax exemption on the death benefit received under Section 10(10D)
- Offers option to add riders for an added layer of security
- Affordable premiums to ensure coverage, without emptying the pockets of the policyholder. The premium may increase if the health of the policyholder is at high risk
- Availing loans against term life insurance policies
Is there any way to calculate term life insurance premiums for a 40-year period?
The premium is calculated based on a range of factors, including the age of the policyholder, annual income, sum assured, medical history, and if they have a habit of smoking, drinking, chewing tobacco or any other major health risks. If someone has greater health risk, be prepared to pay a higher premium.
1. Who should avail the term insurance plans with a 40-year tenure?
It is a wise decision for those who are younger or up to 50 years of age to apply for the policy.
2. Does one receive a maturity benefit if the policyholder survives during the tenure of the 40-year term insurance plan?
No. If the policyholder survives the term, they do not receive any maturity benefit, unless of course they have opted for a plan with a Return of Premium benefit, which allows them to reap maturity benefit at the end of the tenure
3. Can cancelling the policy before the end of the tenure attract a penalty?
There is no such clause. Cancelling the policy before the tenure does not attract any penalty.
- What is a Joint Life Term Insurance policy?
- Eligibility Criteria for Buying Term Insurance in India
- Are Add-ons and Optional Features of Term Insurance Really Beneficial?
- What is the Age Limit to Buy a Term Insurance Policy?
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##Individual death claim settlement ratio by number of policies as per audited annual statistics for FY 2021-22.
#Provided we have received all the relevant and required documents and no further investigation is required. Claim settlement process would be completed within stipulated timelines once the claim request is approved
^ Available under Life & Life Plus plan options
*As per Income Tax Act, 1961. Tax benefits are subject to changes in tax laws.
ARN - ED/05/23/1818