Ideal Duration to consider when opting for a term insurance policy

Having an extremely short tenure for term insurance may not always be the right decision and defeats the very purpose of the term insurance concept. Whereas, if it is longer than required; then you may land up paying a higher number of premiums. Therefore, the term insurance duration is a critical aspect to consider when opting for this instrument.

Term Insurance Policy – Meaning and Benefits:
First, you need to understand what a term insurance policy is. Term insurance is purely a life insurance product that basically provides coverage for a specific period or “term”. If the insured dies during the period of the policy, his or her family is eligible for claiming the death benefit proceeds. Thus, the term insurance policy helps the insureds’ families post their demise. 

The main benefit of term insurance is the chance to avail a higher sum assured by paying affordable premiums. This policy is predominantly chosen by people who have a low income but want extensive coverage for their family post their demise and often suited for persons who are the only breadwinner of their family.  It is also a common option for people whose health is not very favourable or good. 

Why should you buy a Term Insurance Policy at a young age?
Buying this policy at a young age will provide you with the benefit of low premiums until the policy expires or reaches the end of its term. It is advisable to buy a term insurance policy at a younger age due to multiple benefits. You can avail lower premium prices, which remain the same through the policy term. The younger your age, the higher can be the term of your policy. This is because your liabilities are relatively higher when you are young and keep reducing with time. You can opt for a policy term of 40 years. This ensures that you start your policy and insure the high liabilities, and the policy continues till all the dependencies are cleared, and you retire from active service. 

Who should consider a Short Tenure for a Term Insurance Policy?
Opting for a term insurance policy at the age of 60 years for 5-10 years is optimal considering your significant liabilities is expected to have been met, and your children would be financially independent by then.
Longer term insurance duration means a higher premium. Thus, it is not always beneficial to obtain term insurance with a higher tenure. You need to keep a sufficient amount of corpus saved for your retirement for yourself and your spouse. You also need to remember that eventually, your dependents will not be dependent on you.

Importance of Term Insurance Policy Duration
Critical questions, such as those listed below, can go a long way in helping you decide the optimum term for your term insurance. 

• At what age will you retire? 
• How long will you work? 
• Are your parents dependent on you? 
• How long will your children be dependent on you? 
• Is your spouse also working? 
• For how long is your spouse expected to work? 
• When will your major liabilifelities end? 

Considering, term insurance duration is significant for obtaining its benefit; you should opt a term that is most likely to provide your family with financial protection. Thus, most insurance companies offer term insurance for a term up to 40 years. The ideal way of deciding on your term insurance duration is to understand when you are likely to retire.  For example, if you are 30 years of age and plan to retire by the time you are 60 years, you should ideally avail a term insurance policy for 30 years. 

The reason for the same is the question of how early are you likely to achieve your major financial goals? It is assumed that by the time you reach your retirement, you would have accomplished your main long-term goals such as your marriage, house, children’s education, debt reduction, and accumulated a good amount of retirement corpus.

Most people opt for term insurance that usually reaches maturity when they reach 65-85 years of age. Depending on your age and comfort, you can decide on your ideal term insurance duration. Browse the website to know more about Term Insurance and the various Term Plans offered by PNB MetLife.