Picking the right policy at the right time is too tricky. If you pick term insurance for a longer period, you will end up paying more premiums. In similar ways, if you pick term insurance for a short period, the purpose to buy term insurance gets defeated.
Hence, it is too critical to choose the right plan at the right age.
*Tax benefit is subject to changes in tax laws. *Standard T&C Apply
** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines
People often get confused as to when should they buy term insurance. Should I buy term insurance at the age of 33? Or 20? Or 40?
As if there was an appropriate answer to these questions.
The only answer to the right age for buying term insurance is that the policy period should give enough time to your family to become financially independent.
Let us dig in more to understand term insurance, its benefits, right age and time of buying it, factors affecting the term insurance premium, and much more.
What Is Term Insurance?
Term insurance is the purest form of insurance that you can buy for yourself and secure the future of your family after your untimely demise. It is a life insurance policy that provides financial coverage to the nominee in the policy if the life insured dies untimely.
Among all the life insurance policies, Term insurance offers the highest coverage with minimal premiums. Some companies also cover the partial or permanent disability of the insured. Term insurance is the only plan that comes under pure risk.
Term insurance covers the finances of the family against the untimely demise of the life assured. If the life insured dies during the policy duration, then the nominee gets the assured amount from the insurance company. But if the insured survives during the complete tenure of the policy, then there is no payout for the same, except in the case of premium return policies. Pure risk means the risk that cannot be controlled. As death cannot be foreseen, term insurance is a pure risk protection plan for you.
Here are some key features of term insurance that will help you get a better understanding of the plan and help you choose it wisely.
Buying a term plan is comparatively easy than any other plan. The framework of the term plan is comparatively very easy. There are no deep clauses or terms and conditions when term insurance is involved. It is an easy, hassle-free, and simple plan as there are no investments or saving clauses involved. One needs to pay the premiums on time and the insurance provides cover and benefits during that duration.
As easy as to start, it can be canceled as well. As there are no investment or premium benefits involved in the plan, it is easy to stop anytime you want.
A term plan is much cheaper than your one-time fancy restaurant bill. Believe it or not but it is true. As there are no high investment components involved, term insurance is available at very affordable premium rates as per your annual income and age.
Imagine putting 5% effort into your work and getting promoted by your boss. Sounds fascinating right? Term insurance is a kind of plan where at a very minimal premium you can get high coverages. If you choose the correct insurance plan, your loved one will surely benefit from it when you are not there.
It is big-time financial security for your loved ones once you are not around to look after them anymore. It provides financial protection to the family and takes care of the liabilities in your absence. Don’t hesitate to buy it for your family’s better future when you are not around.
The policy period, coverage, payment options (whether monthly, annually, lump-sum) depends on you. You can customize it as per your suitability.
We know that the treatment of expenses incurred during a critical illness can be exhausting physically, mentally, and most important financially. As the critical illness in life is not predictable, a term insurance plan works wonders during this testing time. It is highly recommended to avail of critical illness coverage benefit in your term plan, as you never know what lies in the future.
All the premiums you pay are tax-exempted under Section 80C. With critical illness cover, you can also avail additional tax benefits*.
* Tax benefit is subject to changes in tax laws
Following are the key factors that affect your term insurance premiums:
Age is a primary key factor that decides the premium. At a young age, premiums are much lower than at older age.
Some companies offer rebates to women as studies have shown that the death risk is lower than men.
The coverage decides the premium. For a higher sum assured premiums are high.
Non-smokers get discounts on premiums, while smokers end up paying a higher premium.
Depending on the payouts, the premium amount may differ. If you opt for increasing sum assured premium increases over a period as compared to the level sum assured.
The longer the duration of protection, the higher will be the premium.
The term is one of the key factors that determine your term insurance premium. The Policy Term depends on how long you want to provide financial protection to your family in case of unfortunate eventualities.
Generally, a policy term offered by most insurance companies is between 5 years to 40 years or till age 99. As a Thumb rule, one should always opt for a policy term depending on their retirement age.
Riders strengthen the term insurance policy by providing multiple additional benefits. There are mainly six types of riders:
There is no right age or wrong age to buy a term insurance plan. Whenever you have the right corpus to invest and know that the policy period gives enough time to your family to become financially independent, then is the right time.
So, keeping all the factors related to term insurance and premium payments in mind, one should make a wise decision.
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