What Should Be The Duration Of A Term Insurance Plan?

Term Insurance Plan

As we all know, Life is an adventure for everyone with never-ending ups and downs. Insurance is a great approach that gives financial assurance in case of an unfortunate event. A term insurance plan is a basic and pure insurance plan that provides financial protection to our dear ones against the biggest risks of life. These policies provide coverage of the premature death risk and compensate the grieving family which helps them meet other expenditures. Term Insurance Plan also offers several smart benefits and features ranging from affordable premiums to additional covers i.e., riders.

Note: Now that you know about what is term insurance you can easily buy a term plan for your loved ones.

What Is The Right Time To Buy A Term Insurance Plan? 

Anyone between the age of 18 years to 65 years can purchase term insurance. If you buy a plan in your 20s then you can easily plan your loved one’s future. The first choice of insurers is young and healthy individuals when it comes to offering insurance. Because they have a stable income and their risk of death is comparatively low. 

Benefits Of Term Insurance Plans 

• Lower premium rates and high sum assured – Cost-effectiveness is one of the distinguishing benefits of term insurance as compared to whole life insurance. Term insurance is available at lower premium rates that one can easily buy and enjoy the benefits for the rest of their life. And, the other important advantage of a term insurance policy is the ‘earlier you invest in a term insurance plan, the lesser the rates of premium you are required to pay.

• Easy to Understand - Buying a term insurance plan without reading the fine print may lead to future surprises. But, one of the important features of term insurance is that its terms and conditions, features are quite easy to understand. Once you start paying the regular premiums, then the insurer provides you the coverage for a fixed period, thus offers the term insurance benefits.

• Critical illness Cover - We all can face unfortunate events anytime any day, so the best way to be protected is to be aware of financial security plans available in the market. Apart from death, Critical illness like brain surgery, cancer is also the time for you when your family’s protection comes under threat. Critical illness life coverage along with term insurance is quite popular as it covers the high cost of treatment and ensures that your family lives a normal life.

• Death Benefit - It increases the sum assured amount that is required to be paid to your family in case of an unfortunate event such as accidental death.

• Additional Riders – Term insurance plan generally comes out with the availability of different riders as per your need. They help in strengthening and enhancing the benefits of the term insurance plan. Term plan provides you an option to add riders to your existing policy by paying a minimal additional amount of premium that offers you more protection against financial emergencies.

• Tax Benefit – Term Insurance Plan offers the Tax Benefits on premium paid and receiving benefits are also eligible for income tax under section 80(C) and 10(10D) of Income Tax Act, 1961.

Key Factors to Keep in mind While Choosing the Duration of The Policy 

1. Age 

   The duration of a term insurance plan generally depends on the policyholder’s age. For example, a 29-year-old individual is offered a policy duration of up to 50 years whereas a 50-year-old individual is offered only 34 years. The early you invest, the longer the tenancy of a term insurance plan will be. 

2. Responsibilities 

   If your debts are required to be payable, then your term plan coverage should be equivalent to the unpaid amount of loan and the tenure should be equal to or more than the duration of balance EMIs. So, in event of your unfortunate death at an early age, your family will not be financially burdened by the loan. Moreover, the insurance income will help them reduce all the responsibilities.

3. Financial Objectives 

   As a family person, you surely have certain life stages to achieve and financial objectives to meet. Always decide the duration of the term insurance plan by taking care of your family’s dream, so that all the aspirations will be fulfilled by the sum assured amount that is paid out even in case of your absence. 

4. Maximize the tenure of the policy 

   Go for the maximum term plan duration that is available for assured profile and age. So, a 30 year old individual predicts the need for life insurance for the next 30 years but goes for 40 years duration of a term insurance plan because uncertainties in life can happen anywhere anytime. 

5. Cost-effectiveness 

   The longer the duration of the policy, the lower is the price of the premium. Hence, always determine the flow of cash and the savings and analyze if you can continue paying your premiums easily for the complete duration. 

   Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying.

Factors Affecting Term Insurance plan 

• Age – The early you invest, the lower the premiums you are required to pay

• Gender – The premium of women is lower than the premium of men. As per the reports, their death rates are also lower as compared to men. 

• Sum assured – If your sum assured is higher, your premiums will also be higher. 

• Smoking habits – The premium of smokers is higher than the premium of non-smokers because smokers have a high risk of death. 

The Bottom Line 

Term insurance policies offer long-term assurance and benefits to the policyholder and his/her families at a very minimal cost. Everyone from young working individuals and newly married couples to even parents having children can also opt term insurance plan. The duration of term insurance plan is one of the major considerations while buying a term insurance plan. Always go through the features, terms, and conditions of the policy.

Note: Check all the best term insurance plan in India.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.