A term insurance plan can be an efficient tool to financially ring-fence your family in your absence. Analysing term plans as per the life stage of the insured is critical as requirements change with age, which requires a proportional modification in the coverage to ensure adequate cover.
What is term life insurance?
Term life insurance is one of the most affordable forms of life insurance presently available in the market. Insured individuals select a time frame for which they would like coverage by paying premium that corresponds to and is based on their desired sum assured and other factors. In the event that the insured individual dies within the time frame drawn out by the policy, their beneficiaries/ nominees are entitled to a death benefit which is paid for by the insurance company. Buying term insurance has become very convenient today as it can be done online and in the comfort of one’s home.
Which type of term insurance plan you may choose based on your age?
The relevance of term insurance lies in the fact that it can be purchased at any time during the course of one’s life subject to policy terms. Just that one has to evaluate their current lifestyle and financial goals and plan accordingly.
The death benefit amount in a term plan can be utilized to clear off your debts, securing your family’s regular income or both. There are term plans in market which give you regular income for certain period, or lumpsum amount, or partial lumpsum and partial income on life assured’s death. Depending upon your Age and liabilities you can choose term plans which will suffice your needs.
- Those in their 20s are viewed to be just starting out their professional lives. Ordinarily, individuals falling in this age category have a limited number of responsibilities. That being said it isn’t unusual to have amassed a significant loan by this age – take for instance an education loan. Should an individual run into an adverse event at this age, term insurance comes in handy as it can help provide them with funds and may pay off pre-existing debts as opposed to having the onus transfer onto someone else like their parents. A major advantage of purchasing life insurance at this age lies in the fact that risks associated with life at this age are low. This allows for term insurance plans to be purchased at a significantly lower amount while providing significant coverage.
- Individuals in their 30s are likely to have added responsibilities. These may range from looking after their spouse and child to caring for their parents who may be elderly and requiring assistance. Despite the fact that the earning capacity during this age improves tremendously in comparison to the 20s, individuals may have pre-existing financial commitments. These may include car and home loans, long-term goals in addition to providing funding for offspring’s future. Term plans make for prudent security option at this age as they allow for individuals and their families to have a layer of financial protection should they not be around. Additionally, monthly payments by the insurance company may be used to expense the family’s daily spending.
- Those in their 40s tend to have cleared most long-standing debts which may range from home loans to car loans should they exist. That being said, savings are needed to expense other large financial plans which may pertain to retirement funds, funding a child’s higher education and / or taking care of elderly parents and their health. Each of these financial requirements should be met with financial protection such that they can in fact be funded when the requirement arises. Availing a term plan with significant coverage is therefore recommended at this time. There exists a vast difference in the premiums paid when individuals first hit their 40s as opposed to when they near their 50s. Therefore, it is advisable to get a term plan early on.
- Once individuals reach their 50s, term plan premiums get costlier than what is charged to 40-year-olds. Individuals who are yet to avail of term insurance plans at this age are encouraged to buy them especially if they are the sole earners in their family and have amassed significant debts that are still needed to be paid.
Conclusion
Individuals should consider term insurance as it provides them with a layer of financial security should they need it to secure their loved ones. It is of particular relevance keeping in mind the current Coronavirus pandemic which has brought with it a lot of uncertainty. Term insurance premiums increase with age. In order to incur a low premium, individuals are advised to avail a term insurance plan early on. Term insurance age limit details can be checked while buying term plan as per terms and conditions specified therein.
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