Term insurance is a type of life insurance that provides coverage for a fixed period or term. If the policyholder dies during the term, the nominee or beneficiary receives the sum assured as a death benefit. Term insurance is one of the most affordable and effective ways to secure your family’s financial future in case of your untimely demise.
But when is the right time to buy term insurance? Should you buy it as soon as you start earning or wait until you have more responsibilities and liabilities? How does your age affect the premium and coverage of term insurance? This article will answer these questions and explain the benefits of buying term insurance at different ages.
1. Benefits of Buying Term Insurance in Your 20s
Your 20s are when you start your career and have many dreams and aspirations. You may also have some financial obligations, such as paying off your education loan, supporting your parents or siblings, or saving for your future goals. When you buy term insurance in your 20s, it can help you in the following ways:
- The younger you are, the lower your risk of mortality and morbidity, and hence, the lower your premium.
- Buying term insurance in your 20s can help you get longer coverage and ensure that your family is protected for a longer duration.
2. Benefits of Buying Term Insurance in Your 30s
Your 30s are when you may have more responsibilities and liabilities, such as getting married, having children, buying a house, or taking a loan.
Term insurance plans provide a lump sum to your family in case of your death, which can help them meet their immediate and long-term financial needs, such as paying off debts, maintaining their lifestyle, funding your children’s education and marriage, and planning for your spouse’s retirement. Buying term insurance in your 30s can help you ensure that your family is financially secure even in your absence.
3. Benefits of Buying Term Insurance in Your 40s
Your 40s are the time when you may have reached the peak of your career and income but also have more expenses and liabilities, such as paying for your children’s higher education, saving for your retirement, or taking care of your ageing parents. Buying term insurance in your 40s can help you in the following ways:
- You receive protection against rising inflation. Some term insurance plans offer an option to increase the sum assured at regular intervals, such as every five years, or to link the sum assured to the inflation rate. These options can help you increase the coverage and benefits of the plan and protect your family against the impact of inflation. When increasing coverage, use the term insurance premium calculator to ensure the coverage and premium align with your budget.
- In the 40s, our bodies become prone to illnesses. Term insurance plans also offer an option to cover various health risks, such as terminal illness, critical illness, or disability, which can affect your income and savings and increase your medical expenses. Some term insurance plans provide a lump-sum payout in case of diagnosis of a terminal illness or a critical illness or waive off future premiums in case of disability.
4. Benefits of Buying Term Insurance in Your 50s
Your 50s are when you may be nearing retirement and planning for your golden years. You may also have some financial goals, such as travelling, pursuing a hobby, or leaving a legacy for your family. Buying term insurance in your 50s can help you in the following ways:
- Term insurance plans can provide a source of income to your family in case of your death, which can help them retain their standard of living and meet their retirement needs. Some term insurance plans also offer an option to convert the plan into an annuity plan, which can provide a regular income to you or your spouse after your retirement.
- It can help you plan your estate. Your family can use the tax-free lump sum amount to pay off any estate taxes or liabilities that may arise due to your assets or inheritance.
Term insurance is essential for individuals with dependents or a family to support. It offers financial security and protection to your loved ones during your demise, providing various benefits tailored to your needs. Nevertheless, the advantages of term insurance may differ based on your age and life stage. It’s crucial to comprehend the benefits of acquiring term insurance at various ages, enabling you to select the most suitable plan and coverage for yourself and your family.