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Buy a term plan and secure your family
If you are buying term life insurance, you need to take two main important decisions. One is ‘how much coverage to buy’ and the second one is ‘how long the term insurance policy should last’. In this article, we will go in-depth on how long you should purchase a term insurance policy.
While most people mainly focus on the coverage amount, the length of the policy is an equally important factor that most people don’t put much thought into.
Since term plan does not last for life-long which is why the cost of premium is less expensive when compared to other life insurance products. However, how long should you have a term plan for? Well, it depends on the needs of the family as well as long-term financial goals because every family’s needs are different. In this article, we will show you how to decide how long the term life insurance should last.
Term life insurance policies usually come with terms of 5, 10, 15, 20, 25, or 30 years. You won’t certainly find an 8-year term insurance plan. For many families, a pocket-friendly 10 year term plan can be a good deal even as their financial requirements change over time. However, for some families, it may not be an apt plan. Thus, every family’s needs are different from each other. So, you should consider the purpose that why you are buying a term insurance plan in order to determine that how long you should buy your term plan. It should be your main deciding factor. Here we have mentioned three ways that help you decide how long your term insurance coverage should last:
If you are opting for term life insurance to safeguard the future of your children then it is highly recommended that buy the coverage until and unless they can become independent.
If you are a sole breadwinner if your family, and you don’t want your partner to be forced to go back to work right away after your death then you will need to replace that income. Most of the financial advisor suggests buying coverage that is 10 times the equivalent of the income you are currently earning. It can be too little or too much depending on the person’s circumstances- your coverage requirements depend on your family needs.
And if you’ve existing debt that you don’t want your family to have to pay after you pass away then you should consider these amounts to your term insurance requirements estimate. The debt that you might want to repay includes car loans, mortgage, private student loans, health care bills, etc. Consider the right term length will give them the money that they require to clear those debts.
Hence, the purpose of buying term insurance coverage should always lead to your desired term length.
Based on your age, you can choose the length of a term plan usually between 5 to 30 years in the UAE. Here are some of the common examples where different term length makes sense:
The Bottom Line
Once you finally determine the length of the term life insurance coverage you need, be sure you pretty much comfortable with the premium cost you will be liable to pay. The longer the term length, the more expensive your premium cost will be. Therefore, choose the ideal coverage length that can suit your family needs as well as budget.