Recently the investment trend has changed drastically. Nowadays people get married in a later age, have kids even later. On the top of it, there are long-term home loans that completely roll over the retirement age. However, the liabilities and responsibilities towards your dependents do not necessarily end once you are 60 years old or retired. For this reason, most of the people these days opt for longer-term insurance plans.
However, the choice of policy duration rests with you. You can opt for any policy term as per your requirement. Considering the fact that term insurance plans provide death benefit post the death of the policyholder during the policy term, that’s why it makes sense to buy long-term coverage for young applicants.
Nowadays, term insurance companies in India provide term insurance plans that offer coverage till 85 or 100 years. If you are the only breadwinner in your family and want to secure the future of the loved one's post of your demise then you can consider buying a long-term term insurance plan.
However, before that, you need to understand how to choose the best term insurance plan to meet your long-term financial goals and the disadvantages of buying the same. Check out this quick guide.
Below are Some of the Ways to Choose an adequate Long-Term Insurance Plan:
When buying term-insurance it is a pre-requisite to consider the term for which the policy coverage will last. The policy term usually varies from one insurance provider to another. So, make sure that you choose a time period that works as per your financial condition, age, and future financial goals.
Longer duration term insurance plans are usually better than the shorter duration term insurance plans, as the tenure lasts longer, which means more savings.
When choosing term insurance for the long term, select the option that caters best to your dependents future needs. There are a myriad of term insurance plans that are available in the market but you need to find one that works the best for you.
Since you are investing in a long-term plan, it is important to compare different term insurance plans from top insurance companies in India and then make the payment.
One most important that you need to be sure of is your paying ability to pay-off the policy premium for the next 50, 60 or 70 years. So, ponder upon your current income, possible increments, savings, inflation, and future scope of income growth to be able to meet the premium cost let’s say after say 30 years. Therefore, make sure that your annual income is enough to be able to continue with the policy. Else, you can avoid a plan with too high term insurance premium rates.
These are small but important factors that an applicant needs to consider. When buying a term plan you must mull over your age and health condition. However, it makes sense to invest in the long-term at a young age if you want to ensure higher savings in future.
So, before you choose a term insurance plan you should consider your age and any health condition that you are suffering from. Because a person with serious health conditions, might not be eligible to buy a term plan for a longer duration.
Most of the people buy term insurance cover for more than 40 years to ensure that they are able to fund their child’s marriage, child’s higher education cost, have comfortable post-retirement years and so on. So, while you select the term and coverage amount make sure that that you factor in the inflation as well.
Taking an example of the soaring education costs, the fees of B.Tech Course the costs Rs. 10 lakh now would cost Rs. 42 lakhs after 15 years. So you need to choose the sum insured, policy duration that would help your dependents lead the dame lifestyle even when you are not around.
You can seek insurance advice from a professional before you get yourself into a long-term commitment of paying a premium for a term insurance plan for the selected duration. Analyze all the pros and cons before you actually make the payment. You can ask the experts to take you through different plans and their premium rates and duration and help you select the one as per your requirements.
Naturally, longer coverage tenures would mean paying premium for a more years, as you need to pay it regularly throughout the policy duration. But then again, is it feasible to pay the premium for such long tenures?
Buy a long-term term insurance plan would mean paying off regular premiums for the entire duration to keep the policy in force. And, it can be disadvantageous for the below-mentioned reasons:
If you choose a longer duration term plan that promises coverage up to 85 or 100 years, the premium would be an added expense post your retirement also. You will be liable to pay the premium till the policy term i.e. 85 or 100 years of your age. So, it can be difficult for you to pay premium regularly especially when you do not have a regular earning.
In cases where the premium needs to be paid for such a long tenure, there is a higher probability of you inadvertently missing a payment during the retirement years. Non-payment of the premium would mean policy lapse. And all the year that you have been paying would be lost, along with the coverage benefits. So, make sure that it is a well-thought decision.
In a Nutshell
The above-mentioned parameters would help you select an adequate term insurance plan for longer tenure. You can now secure your family without worrying about future payments once you are sure while purchasing the policy. You can check out some of the best long-duration term plans on our site, compare them on the basis of the above factors and make an informed choice.