One of the most popular life insurance policies available today is the term insurance plan. A term plan provides life insurance for the family with financial protection in unfortunate times. This insurance policy helps the family take care of their significant expenditures and other financial needs after the insured’s demise. The policyholder can also add different riders to the term plan, which can enhance the coverage. Let us look into what term insurance policy is.
What is a Term Insurance Plan?
The policyholder who buys a term insurance plan pays premiums to the insurer for a specified tenure. If something happens to the policyholder during the term of the policy, their beneficiaries will get the sum assured. The sum assured paid to the beneficiaries if called the death benefit.
Generally, term insurance plans do not have any maturity or survival benefits of the insured. However, life insurance companies now offer term plans with a return of premium (TROP) that pay the sum of the premiums paid as a survival/maturity benefit to the insured.
Term insurance plans are one of the most affordable life covers available in the market. As they offer a pure life cover, without the frills of any savings or investment, the cost of coverage is low, which translates into lower premiums.
To ensure that you get the best term insurance coverage and the lowest premium, it is essential you buy it as early as possible. The cost of covering a young, healthy person is lower, which allows you to avail lower premiums at a younger age. As you age, the term insurance premium will keep rising.
Getting a Term Insurance Plan at Different Ages:
#1 The early 20s:
When you have just entered your 20s, you have very little to no financial responsibilities. With fewer expenses to take care of, you can opt for a term insurance plan with moderate coverage. With the advantage of being young and healthy, this policy will get you low quotes for the term insurance premium amount.
#2 The late 20s:
There are several different investment options in India, and insurance plans are among the more popular choices. For someone in their 20s, savings and investments are of utmost importance as your financial responsibilities will start growing.
A term insurance plan can be an ideal investment option which will offer financial protection to you and your loved ones without you having to break the bank. The premiums will be slightly higher in your late 20s than in the early 20s.
#3 Early/mid-30s:
In your 30s, the responsibilities keep growing, and so do the expenses. A new home or a car may be on the list; at the same time, this could also be the right time to start planning for your retirement. When purchasing a term plan, find out more about the policy term, so that you can enjoy its benefits in your retirement easily.
As you age, the risk of critical illnesses also goes up. You can avail a critical illness rider with your term plan at this age. You will need to explore options under term insurance plans that offer life cover, at least, for the next 30-40 years.
The best time to buy a term insurance plan is when you are young. If you intend to get the best term insurance premium for yourself, you must get it when you are young and healthy.
As we get older, the body naturally starts getting weaker and is more prone to health risks. This leads to greater risk and therefore, an increase in your premium amount. So, it is always preferable to start looking at insurance companies and their term insurance policies at an earlier stage in life.
What to check when buying a term insurance plan?
The claim settlement ratio of an insurance company is one of the major indicators of a good insurance provider. While you should surely check all the features and different term insurance plans that an insurance company has to offer, also check the percentage of claims they have successfully honoured in the past.
Final Words
A term insurance plan is among the more affordable insurance policies available. It can provide your family with financial assistance to help them in your absence. Make sure that you read the policy documents carefully and assess the features well before buying a term plan. Also, buy a term insurance plan in your early 20s to enjoy extensive coverage at low premium prices.