Buy a term plan and secure your family
A term insurance plan is like an umbrella that protects you against the harsh rains and as a result, one must foresee the future before picking up a policy that best meets your requirements. The ideal duration of one’s term insurance policy must be the number of years you expect your family to depend upon you financially.
Term insurance plans are a life insurance product that offers a financial cover to the policy buyer for a pre-defined time period. In the event of the insured’s death during the term of the policy, the death benefit is paid by the insurance company to the beneficiaries of the policy.
There is a reason this life insurance product is so popular. They are:
It is advised by all that one should buy a term plan at an early age due to its many benefits. The primary benefit of buying this plan young is that it will come with low premium rates that will be locked in until the policy expires or until the end of the term. Buying the policy when you are old will incur higher premium charges due to one’s medical history and because insurers associate an element of risk with older folks. Another advantage is that the younger you are, the higher will be the term of your policy. Furthermore, the liabilities when we are young are certainly higher than they are when we are old. It, therefore, makes sense to start as early as possible so that the plan continues until all your dependencies are taken care of.
There are a few important questions one needs to ask that will help with deciding the ideal term of one’s term insurance plan:
1.How long are you planning to continue to work?
2.At what age are you planning to retire?
3.Do you have any dependents?
4.Till what age will your kids be financially dependent on you?
5.Is your partner working?
6.For how long will your spouse continue to work?
7.When will you be free of your major liabilities in life?
Giving careful consideration to the duration of your term insurance policy is vital in being able to enjoy its benefits. One should decide upon a term that is likely to offer protection to your family from any financial emergencies. As a result, most life insurance providers offer a term insurance cover up to a period of 40 years. The most ideal way of deciding upon your term plan duration is to foresee when are you most likely to retire. For example, if you are currently 30 years old and are planning to retire by the age of 60, it is ideal for you to opt for a term insurance cover of 30 years.
The reason behind this is that this is the duration when you are most capable of achieving all your major financial goals. The assumption is that by the time one reaches his or her retirement, they would have already achieved their long term goals like buying a house, getting married, their child’s education, reduction of debts while also having accumulated a significant amount in their retirement corpus. Hence, most people ideally pick their optimum term insurance plan to reach its maturity by the time they are 65 to 85 years of age. On the basis of your age and comfort, you can arrive at the decision of your ideal term plan duration.
When someone is opting for term insurance at the age of 60 or above, then buying a term plan for 5 to 10 years seems optimal since one’s liabilities at this age are likely to have already been met and their children would be already financially dependent and no longer need their financial support.
A long term insurance plan means higher premiums. Therefore, it is not always wise to get a term insurance plan with a higher time duration. One needs to have a significant corpus saved up for your second innings after retirement for them as well as their significant other.
In a Nutshell
Getting life insurance is an important decision in everyone’s life. Therefore, it is wise to carefully evaluate all options before deciding on one that takes care of you as well as your family by offering a financial safety net that supports when it is most needed!