Although you may not have a backup plan to take care of your family’s emotional well-being, you can have the financial cover that can be the foundation of your strategy and can be used to pay off your loans and other financial obligations.
And while we’re talking about our family’s financial security, one system that has gained popularity is a longduration of term plan insurance strategy. A term insurance plan gives you a higher sum assured for a lower premium.
The cover amount you require for your term insurance plan and the length of the plan happen to be the two most important considerations when purchasing term insurance (tenure). Generally, the cover amount should be ten times your yearly salary. You may also calculate by either using an onlineterm insurance calculator or by using the following formula:
Income * working years = total protection coverage.
Table of Contents
The following are the main elements to consider while choosing the length of a term plan:
- Age:
Your age can affect the length of time you can use your term insurance plan. For instance, multiple onlineterm plan offers a tenure of up to 50 years to a person who is 30 years old but only 15-25 years to a person who is 50 years old. As a result, the younger you are, the longer your tenure.
- Liabilities:
If you have debts that need to be paid, your term insurance coverage should equal the sum owed on the loan, and the length should match (or exceed) the time it may take to pay off the total. So, even if you pass away young, your family won’t have to pay back the debt. Instead, the money from the insurance may help them out.
- Financial Objectives:
As a family, you have several financial milestones and objectives to meet. You can align the term plan’s tenure with these significant anniversaries so that the sum paid can take care of your financial obligations even in your absence.
- Get the most out of the length:
As a general rule, choose the longest possible term of extended-term insurance, given your age and insurance profile. So even if you only think you’ll need life insurance for the next 30 years as a 30-year-old, you should still choose a 40-year tenure.
This can be due to the ambiguity of financial matters. It may not be offered if you purchase insurance for the following ten years at age 60. On the other hand, there would be no consequences if you chose to stop at the age of 60.
Cost is a significant deciding element as well. Longer tenure can be associated with lower premiums. Consider your present savings and cash flow to determine if you can start and continue paying the premium comfortably for its entire length. Use an onlineterm insurance calculator to calculate the affordable premium costs as per the desired needs.
The advantages of purchasing term life insurance include:
- With a term insurance plan, the sum insured can be large, and the premium cost is low. Additionally, the premium payment is always the same.
- Per Section 80C of the Income Tax Act of 1961, the premium paid is also exempt from taxation up to a limit of Rs. 1.5 lakh.
- You can add more features to a term policy, such as a waiver of premium, critical illness, accidental death benefit, and women’s critical illness riders.
- The policy period can range from five years to sixty years.
- You must be at least 18 years old and no older than 65 to buy term insurance.
- One can get insurance starting at 25 lakhs and going up to 5 crores.
Choosing the length of your term plan is entirely up to you and your financial situation. But the elements stated below can undoubtedly assist you in making a better choice. You should list your financial obligations first.
Conclusion:
Because there won’t be any regular income if you retire at age 58 or 60, the length of a term insurance plan should ideally equal the number of years your family would depend on you. Like super long-term policies, a few common ideas and thoughts can help you choose the ideal term insurance option for you and your family.
Thus, purchasing well planned and desiredduration of term plancoverage is likely your most practical and perplexing choice. So, with careful planning, choose a short- or long-term plan based on your needs and budget.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
Also Read: Income tax filers again got relief, extended deadline for various types of tax compliances
