Even the best-laid plans go awry sometimes. You could have planned every last detail with clarity, but there are too many uncertainties in life that can catch you off-guard. Besides creating detailed 5-10-20 year financial plans, you should also have a few options that will help your family members roll with the punches that life throws. An insurance policy, especially a term insurance plan, allows you to safeguard your family's hopes and dreams irrespective of life's uncertainties.
A term plan is a pure protection insurance plan that provides you a substantial life cover in exchange for a periodic premium payment. With a term insurance policy, you have the peace of mind that your family members and loved ones will be cared for in your absence. You may have heard that it is better to buy insurance plans early on in life. Many find this directive confusing—why should you buy a life insurance or term insurance policy at an age where it is not needed immediately?
With a term insurance plan, timing is crucial. At a young age, you present little risk to the insurer, which means that you are offered a lower premium that continues through life. The timing of buying a term insurance plan is of incredible importance for other reasons, too. As you grow older, your requirements, income, lifestyle, financial goals, and responsibilities keep changing. When you buy a term plan, you need to match what is being offered with your age-specific needs.
Here's a look at which term insurance plan would suit you the best depending on your age.
Buying a term plan in your 20s
You're young, and life is just beginning—this hardly seems to be the time to think about getting a term insurance plan, does it? However, your 20s are crucial in many ways. Yes, you should enjoy your carefree life and focus on building a career worth defending. At the same time, your 20s are a great time to capitalize on—get life insurance out of the way as soon as you can because you will be able to get a term insurance plan at the lowest rates possible.
If you are paying an educational loan or have purchased liabilities such as a car or personal loan, buying a term insurance plan becomes all the more critical. In case of an unfortunate event, your aging parents should not be left paying off your liabilities.
In your 20s, you can easily avail of a long policy term and a substantial cover at low premiums. For instance, you can benefit from an Rs. 60 lakh-term insurance plan cover for a policy term of 40 years, at a yearly premium of just Rs. 3,682 with the IndiaFirst Life e-Term Plan (calculated for a 20-year-old male, non-smoker).
Getting a term insurance policy in your 30s
Your 30s are a time for growth—professionally and personally. Your career is set on an upward trajectory, and your income grows proportionally. On the personal front, this is the time most people choose to get married and have a kid or two. Instead of being the ones to foot the bills, your parents are likely to be your financial responsibility now.
Your 30s are also a time for getting into liabilities such as home and car loans to build assets for yourself. While your income has increased, so also have your outgoings and responsibilities.
The purpose behind buying a term plan during this decade is to secure your dependents' financial future when you are not around. In case such an unfortunate situation arises, your dependents can use the lump sum death benefit from a term insurance plan to pay off any outstanding liabilities.
Suppose you choose a term insurance policy with a monthly income option. In that case, your family members will receive monthly pay-outs in addition to a substantial lump sum amount as a death benefit. You can also opt for a term insurance plan with basic coverage and increasing monthly income to battle inflation in the years to come. Such a term insurance plan would safeguard your partner and other dependents when you are not around.
If you are buying term insurance in your 30s, keep in mind that you need to buy a term plan with adequate coverage. It is recommended to purchase a term insurance policy with coverage equal to at least 15-20 times your annual income.
Buying a term plan in your 40s
The loans you took up in your 20-30s are likely close to being paid up. Even though long-term debts may not be bothering you, other responsibilities such as caring for ailing and aged parents, planning for your children's higher education, and securing your retirement corpus loom large in your 40s. The need to secure your family's financial future only increases at this time.
In your 40s, it is recommended that you buy a term plan with a large cover that will be enough to meet your family's lifestyle needs and help keep their dreams on track.
If you already have a term insurance policy, consider increasing coverage or buying an additional term plan. If you are buying your first term plan, do it as soon as possible to avail of reasonable premium rates.
At 40, you can get an Rs. 1 crore term plan with a policy term of 20 years at an annual premium of Rs. 13,216 with the IndiaFirst Life e-Term Plan (calculated for a 40-year-old male, non-smoker). At 50, you will get the same Rs. 1 crore term plan with a policy term of 10 years at an annual premium of Rs. 23,954 (calculated for a 50-year-old male, non-smoker). Needless to say, you stand to spend a lot more in premiums if you wait any longer.
Term insurance policy in your 50s
Your coverage and the premium amount you pay depend on the risk bracket you fall in from the insurer's perspective. A young, healthy person who does not smoke presents a very low risk compared to an older person or a smoker. At 50, your term plan premium will be much higher than it would have been even a decade ago. This premium increase is not affected by a smoking habit.
At this age, you are most concerned with building your retirement corpus. Instead of a pure protection term plan, consider a term insurance policy with a return of premium option, so you have some survival benefits to count on.
Having a term plan with a critical illness rider is also a good idea at this stage. In case you are diagnosed with a critical illness covered in the rider, your term plan can provide you with a significant corpus to help pay for treatment without dipping into your savings.
Perhaps, there has never been a better time to ensure the financial safety of your family members with ease. Term plan options abound, and you can access pretty much all insurance products online from the comfort of your home. Customise your policy to meet your specific needs based on your age and your family's requirements. Get a free term insurance premium quote from IndiaFirst Life with minimal information input from you, so you can determine how much coverage you need and how you can get it.
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