You may have heard that term insurance is one of the best ways to secure your dear one’s financial future in case of your untimely demise. Term insurance is a pure protection insurance that provides higher coverage at a low premium for a fixed time. But when is the right time to invest in a term plan? How does your age affect the premium and the coverage of your policy? Here, we will answer these questions and help you make an informed decision.
Why Age Matters for Term Insurance?
Age is one of the most important factors determining a term insurance policy’s eligibility, premium, and coverage. This is because age is directly related to the risk of mortality, which is the probability of dying within a given time. The higher the mortality risk, the costlier the premium and the lower the coverage.
As you grow older, your risk of mortality increases due to various reasons, such as health issues, lifestyle habits, family history, and occupational hazards. Therefore, insurance companies charge higher premiums and lower coverage to older applicants than younger ones. They may also impose certain restrictions for older applicants, such as maximum entry age, maximum policy term, and maximum sum assured.
How to Choose the Right Age to Buy Term Insurance
There is no definitive answer to when is the best age to buy a term plan. However, some general guidelines can help you make a smart choice.
- The earlier, the better. The perfect age to get term insurance is when you start earning and have financial dependents, such as a spouse, children, or parents. This way, you can lock in a low premium rate and enjoy long-term coverage. You can also avoid the hassle of medical tests and underwriting, which may become more stringent as you age.
- The longer, the better. The ideal policy term for term insurance is the longest possible, depending on your age and financial goals. This way, you can ensure that your family is protected for the maximum duration and that your policy does not lapse before retirement or other milestones. You can also benefit from the tax deductions on the premium payments for the entire policy term.
- The higher, the better. The ideal sum assured for term insurance is the highest possible, depending on your income and liabilities. This way, you can ensure that your family receives adequate financial support in case of your demise and that they can maintain their standard of living, pay off debts, and fulfil their dreams. You can also benefit from the tax-free death benefit that your nominee will receive.
How to Compare Term Insurance Plans Based on Age and Premium
Before you buy a term insurance plan, it is advisable to compare different plans based on your age and premium. This will help you find the best plan that suits your needs and budget. Here are some steps that you can follow to compare term insurance plans:
- Use an online term plan calculator. A term insurance calculator is a free and easy tool that helps you estimate the premium and sum assured of different term insurance plans based on your age, gender, income, and other factors. This tool can compare various plans and choose the best value for money.
- Check the policy features and benefits. Apart from the premium and sum assured, you should also check different term insurance plans’ policy features and benefits. These include the policy term, the death benefit payout options, the rider options, the claim settlement ratio, the customer service, and the exclusions and limitations. You should choose the plan that offers the most comprehensive and flexible features and benefits that suit your needs.
- Read the policy document carefully. Before you finalise your term insurance plan, you should read the policy document carefully and understand the terms and conditions, the inclusions and exclusions, the premium payment mode and frequency, the grace period, the renewal and cancellation options, and the claim process. You should also check the reviews and ratings of the insurance company and the plan from other customers and experts.
Term insurance is a vital financial product that can safeguard your family’s future in case of your untimely demise. However, to get the best out of your term insurance plan, you need to choose the right age to buy it, the right policy term, and the right sum assured. You also need to compare different plans based on your age and premium and select the one that offers the best features and benefits. By following these tips, you can make a wise and informed decision and invest in a term plan that gives you peace of mind and security.