What is the Right Age To Buy a Term Life Insurance Cover?

Term life insurance is essential for protecting your family’s financial future, especially if you are the sole breadwinner. In the unfortunate event of an untimely demise, having a term insurance plan will help your family if you are the one who provides for them financially. Preparing well for the future in case of an unfortunate demise will ensure that your family is well taken care of and will not be in a situation of financial desperation or need. This article will explore different aspects of term insurance, including the age at which you should be investing in a term insurance plan.

What is a Term Insurance Plan?

In simple terms, a term insurance plan is a death benefit insurance plan that will provide the insurer’s nominee with a lump-sum amount upon their untimely death. It is one of the very few types of insurance that can provide a large amount, up to Rs. 1 crore or even more. But the amount depends on the amount of the premium, the number of premiums submitted, and also the age and income of the insurer.

It is important to be cautious since there are some insurance plans with a maturity limit, and if the insured outlives the maturity limit, there will be no payout. So, make sure you pay careful attention to those details while investing in a term insurance plan.

What Sort of Premium Will You Have To Pay?

The premium you will pay depends on factors such as age, sum assured, term, gender, and others. Here are details on five of these important factors:

• Age: Age plays a significant role in insurance policies. At a younger age, the premium you pay will be lower compared to what you will pay 10 years later. So, if you get term insurance at an early age, you will be paying less than what you will have to pay later.
• Sum Assured: If the sum assured or the payout is higher, then the premiums you pay will be higher too.
• Term: Like premiums, the term can impact the final payout that the nominee receives. If you choose to have longer terms, you will also have to pay higher premiums, but you will receive a higher final payout. Most term insurance policymakers have term benefits, such as a duration of 5 to 40 years. Some even have a term that allows insurance until the age of 99.
• Gender: Some policymakers offer lower premium amounts for women. This is based on studies that indicate that women have a lower death rate compared to men.
• Lifestyle: Your lifestyle choices can affect the premium you pay. For example, a smoker will have to pay higher premiums. This is based on widely accepted research that indicates smokers have a higher death rate compared to non-smokers. The simple calculation is: the higher the death rate, the higher the premium amount.

The Right Age To Buy Term Life Insurance 

The question many people ask is: When is the right age to buy term life insurance? The answer depends on several factors.

Anyone between the ages of 18 and 65 can buy term life insurance. But since most people start getting their first jobs in their early 20s, that is considered a good enough age to start investing in term life insurance. If you are earning well, your expenses are not too high, and you have family members who financially depend on you, then it is important to start thinking about a term insurance plan as soon as you get your first job.

Some people may have low earnings and high expenses early in their careers. Once you start earning higher salaries and are capable of managing your expenses, that would be the ideal time to start investing in term life insurance. Mostly, by the end of your 20s or early 30s, you should have a stable enough financial life to buy a term insurance plan.

Most insurance policymakers prefer people who are young and in good health. Therefore, it is wise to take advantage of this by investing in term insurance early.

Benefits of Term Insurance

Term life insurance comes with various tax benefits. So, you will pay a lower premium since there will be no tax amount included in the said premium. Term insurances are exempt under Section 80(C) of the Income Tax Act, as long as the premiums are under Rs. 1.5 lakh. The final payout that the nominee receives will also be exempt from tax under Section 10(10)D as long as the annual premium is less than 10% of the total sum assured.

Term insurance can also benefit you if you have any loans in your name that are yet to be repaid. In the event of your untimely demise, the outstanding loan amount can be simply deducted from the final payout of the term insurance. This saves your family from having to worry about how to repay your loans.

Most people who want to secure their family’s financial future invest in term insurance. Term life insurance allows your family to have stable financial support after your unfortunate demise and also gives you confidence that they will be well looked after due to your smart financial planning.

Conclusion

Planning your finances well secures your future and the future of your family members. One of the many ways you can do this is by buying term life insurance. This will allow you to easily secure the financial future of your family members, especially if you are their sole provider. If you are searching for term insurance plans, be sure to conduct thorough research to find a term insurance plan that is appropriate for your needs.

To read more articles like this one with information on term life insurance, visit Piramal Finance. You will find other articles with details and guidance on term insurance plans and how you can get started on securing your family’s financial future!