People tend to think of term insurance as a safety net that’s only necessary to purchase when you have too many responsibilities to shoulder and dependents to protect. After all, the death benefit from a term policy is only helpful when there’s a health-related risk due to old age or medical issues. However, there’s much more to a term insurance plan than you know.
In this article, we’ll talk about how and why such plans are crucial at different stages of life. We will then discuss the best time to purchase a term plan on the basis of your changing needs. Before that, let’s understand the overarching benefits of a term policy.
General Benefits of a Term Insurance Plan
- Depending on your age, you can avail the advantage of a better sum assured at premium amounts that are affordable.
- Many term plans allow you to access the death benefit payout in multiple ways, whether you wish to receive it lump sum, broken down as monthly payments, or a combination of the two.
- You can choose additional riders# for critical illness or disability to enhance the coverage value of the policy at very little extra cost. Look for plans that offer waivers of premium in such situations, as this can help you stay protected for the entire policy term while having sufficient funds to pay for medical expenses.
Now that you know exactly how a term insurance plan can secure your family’s financial future, it’s time to break down the importance of these policies according to your age group.
The Significance of Insurance to Youth (Individuals in their 20s)
When you are young, and in the prime of your health, the necessity of a term life insurance policy doesn’t seem as pressing. There are fewer responsibilities to shoulder if you aren’t married or have children. Your parents and loved ones aren’t dependent on your income. Thus, not wanting to purchase term insurance is quite understandable from this perspective. However, there are several factors one might overlook in such a thought process.
- Increasing Health Concerns: India has one of the largest youth populations in the world. Over a few decades, changing lifestyles, along with factors like environmental degradation, work-related stress, and other mental health concerns, have rendered young adults vulnerable to a host of medical problems.
The option to add a critical illness or disability cover to your term policy gives you access to funds necessary for combating these concerns without having to drain your savings.
- Lesser Premium Costs: Being young is all the more reason to buy a term policy because there’s no inherent risk typically associated with old age. With no genetic or underlying conditions, your term premiums will be far more affordable than when you turn older.
This will allow you to save a significant amount in the long run while helping you attain peace of mind right from a young age.
Many term insurance plans these days offer the flexibility of increasing your cover at important milestones such as your marriage or the birth of a child, thus adapting to changing needs.
Importance of Term Insurance for Individuals Building a Life and a Family
Once you start earning and building a life for yourself, the number of responsibilities and liabilities go up. You may even start a family in this phase of your life, which makes a term plan even more important. Your family - a spouse, young children, old parents, younger siblings, etc., might be financially dependent on you. Or you might have availed of certain loans, such as a home loan, a business loan or a car loan and do not want the burden of debt to befall your loved ones in your absence. Here is where a term plan helps:
- Secure the financial future of your dependents: The term plan payout will help your financial dependents lead a stable and secure life even after your demise. You can opt for either a lump sum payout or a monthly payout for the death benefits, based on the financial capabilities and needs of your family.
- Take care of any outstanding debts and liabilities: Your 30s and early 40s are the time for buying a house or a car. If you are an entrepreneur, you may take out a major loan for your business. These are significant liabilities and can put huge pressure on your family in case of your sudden demise. A term plan payout - lump sum or even regular, can help your family repay the loan amount easily. Just make sure to account for the outstanding financial liabilities when finalising your sum assured.
- Be prepared for deteriorating health conditions: This phase of life also brings a lot of professional stress. As you are working tirelessly to provide for your loved ones, you may forget to take care of yourself, which can lead to a range of lifestyle diseases, such as diabetes and hypertension. A term plan with a comprehensive health-based rider# can help you take care of any medical expenses arising from critical and terminal illnesses and ensure all-round protection.
Importance of Term Insurance for Senior Citizens
By the time you touch retirement, it’s likely that you have paid off the bulk of your debt and accumulated certain assets. Your children might also be financially self-sufficient and in the process of starting families of their own. At this age, therefore, you might not feel the necessity of a term life insurance policy.
However, there’s a reason the maximum entry age for buying term plans is 60 years. By purchasing a plan that’s right for your needs, you can avail multiple benefits, such as:
- Securing Your Loved Ones: Even if your children are in a good place and have term policies of their own, your spouse might still be dependent on your pension and other sources of income. Having a term insurance policy ensures that your beneficiary remains financially supported in your absence.
- Leave behind a financial legacy: Having a term plan at a later stage of life enables you to leave behind a sizable financial legacy for your loved ones.
As you can see, term insurance provides a variety of benefits that vary according to your age and financial goals. In general, it serves as a necessary cushion for loved ones by offering long-term comfort along with the ability to fulfil their needs in the event of the policyholder’s untimely death.
The Apt Time to Buy Term Insurance
If you’re still wondering about the time to purchase a term plan, that would be right now.
Those in their 20s who are just beginning their professional journey would benefit from the low premium costs of a term life insurance policy. Individuals who are in their 30s might be starting a family, in which case a term plan can help you secure their future.
People in their 40s and 50s have several responsibilities, including planning for retirement. They are also more vulnerable to health risks than those who are young and therefore in greater need of a policy that offers death benefits and additional riders#. So the need for a term plan doesn’t truly cease until you have absolutely no dependents, debts, and responsibilities.
These days, it has become increasingly simple to buy a term plan online according to your specifications. It allows you to analyze the plans based on factors like affordable premiums and overall features. Tata AIA Life insurance allows you to analyze our term plan coverages online and find the apt term plan with an online term plan calculator.
You can browse our range of online term insurance covers, along with multiple riders#, and choose the one that best suits your requirements and age group.