A term life policy is the simplest form of a life insurance policy. When you begin your professional journey, you are likely to get plenty of advice on why buying life insurance is essential. You probably think of it as the first avenue in which you should put in some part of your income.
 

A term insurance policy is a contract in which the insurance company promises to pay the sum assured under the policy to the nominee of the policyholder should the latter pass away during the tenure of the policy.
 

What Are The Features of a Term Policy?
 

A term policy has the following features.
 

• Fixed premium: The premium of a term policy is determined according to a few factors such as the term insurance coverage, age of the applicant, his/her health status, lifestyle habits, pre-existing illnesses, premium payment term, sum assured, etc. The premium amount is fixed for the entire tenure of the policy.
   

• Fixed tenure: The tenure of the policy or, in other words, the duration for which the life cover would be available under the policy is fixed at the inception of the contract.
   

• Death benefit: The sum assured under the policy would be paid to the nominee of the policyholder. This amount is called the death benefit.
   

Why Should You Buy a Term Policy?

A term insurance policy has several advantages, which is why it is a widely purchased insurance product. Some of the salient benefits of term life insurance policies have been discussed below.
 

• Affordable premium: Term insurance policies tend to have the least premium among all types of insurance plans. As their overall cost is low opposed to the coverage assured, they are preferred by individuals looking for life cover.
   

• Protection against loan liabilities: The sum assured under term life policies is often determined by policyholders on the basis of the value of their outstanding liabilities, including loans. Therefore, the death benefit received by the family of the deceased can be used to settle those liabilities.
   

• Flexibility: Term insurance premiums can be paid in monthly, quarterly, semi-annual, or annual intervals. Thus, a systematic approach can be developed to meet the payment on the due date.
   

• Staggered payouts: The death benefit under a term plan can be paid either as a lump sum or partially as a lump sum and the remaining as regular income according to the preference of the nominees. Staggered payouts help in better financial management by avoiding improper use of the funds received, especially if the nominees do not have proper expertise in handling money.
  
  

What Is The Best Time to Purchase a Term Policy?
 

Life insurance policies are essential to building a financial safety net for your family. A term insurance plan can be used as a protective cover for your family against the financial distress that might arise should the main earning member suddenly pass away.
 

Even with the best financial planning, unexpected death causes dislocation, and term plans can help your family by providing them with timely financial support. There is no such thing as the “right” or “best” time when it comes to buying a term policy. However, it is always prudent to buy a term plan early in life.
 

Alternatively, you can buy a term policy as soon as the need for such a plan is felt, that is, when you have substantial financial commitments or more risk to your life due to illness, lifestyle disorders, etc. As in the rule with investing, the earlier the policy is started, the better for the policyholder.
 

Here Are The Advantages of Buying a Term Plan Early In Life
 

Buying a term plan early in life is appropriate for continuing with your financial journey. You will be free of worries about how your family would meet their loan obligations or manage without the earnings that you provide.
 

Therefore, you should purchase a term plan as soon as you begin to earn and assume financial obligations towards your life goals, such as building a house or getting married. Buying a term plan early brings the following benefits.
 

• Lesser premium: Term plans have the lowest premiums among the different kinds of life insurance plans. However, if you purchase a term plan in your twenties, the premium would be still lesser than if you started in your forties.
   

  This is so because the premium on term plans are computed according to the age of the applicant, their health status, coverage period etc. For a younger applicant without any major pre-existing medical conditions, the risk of death is perceived to be lesser; therefore, the premium is lesser.
  
  

• More sum assured: If you purchase a term policy when you are young, you can get more sum assured because the insurance company will agree to more amount based on your estimated earnings potential over a longer period of time in the absence of any illness, disability etc.
   

• Longer coverage period: It is obvious that if you buy term life insurance early in your professional life, you can get coverage over a longer period with extensions of tenure as required. This will give you the confidence to assume proportionate financial commitments without burdening your family in your absence. 
   

Before buying a term plan, you should estimate the amounts you would need at any given point in time for various purposes, for instance, meeting loan obligations, household expenses, other predetermined commitments, etc. You should factor in inflation as well.
 

Then, you should reasonably estimate how much of those expenses can be met from other sources. For the balance amount, you should purchase a term life insurance policy to keep your family safe from any untoward consequences.
 

Buying a term life insurance policy is very easy. For instance, at Tata AIA, we offer a simple online process to purchase a term policy.
 

Once you know the premium payable, you can submit the documents online and pay the premium securely. After verification of the documents, the policy will be delivered to your email address. You can also pay the subsequent premium online (if applicable) on the due dates to keep the policy current.
 

Conclusion
 

You should not delay purchasing a term life policy because that could lead to more premium and lesser coverage. And it would unnecessarily leave your family reeling from financial as well as emotional trauma when you are no more. Therefore, the best approach is to buy a term policy early to enjoy flexibility, lesser premium, and more coverage.

L&C/Advt/2023/Feb/0528