What is term insurance? How does it work?
Term insurance is the most basic form of insurance and life insurance. It is a product that gives the family members of the sole or co-income earner financial support on their unforeseen death or in their acute absence. This absence can be temporary or permanent. For instance, death and death caused by accident are permanent instances of absence. And physical disabilities caused due to an accident or the diagnosis of a critical/ terminal illness are temporary/acute instances of absence.
If you are the sole breadwinner of your family, term insurance aims to provide financial security to your parents, siblings, and other blood-related dependents. It does this by giving a guaranteed death benefit (also called the sum assured) on your unforeseen demise. This death benefit ensures that your family has the funds to continue to live their lives.
To receive the term insurance benefits, you have to pay the premiums through a payment plan of your choice. Once you pay these, you unlock the features of the best term insurance plans.
What is the right age to buy term insurance?
Term insurance providers have a fixed age bracket for those who can buy term insurance. Generally, this age criteria starts from 18 years and goes up to 65 years. However, just because you can buy term insurance at any time doesn’t mean you should delay it. The ideal age to buy term insurance is in your mid-20s. Your 20s are the time where you step into the real world of financial responsibilities. You might start contributing at home or have your entire family dependent on your income.
Irrespective of the reason, buying term insurance at that age gives you a definitive age advantage. For most insurers, the general rule of sale is that the younger you are, the lower their liability of insurance payout is. This lower liability translates to lesser premium prices without compromising on the high scope of coverage you receive. Moreover, if you are healthy and do not have any underlying medical history or harmful habits like smoking, your term insurance premiums decrease. This gives you first preference among older buyers and buyers with an underlying threat of diseases or smoking habits.
However, if you haven’t bought term insurance in your 20s, you can decide to in your 30s, 40s, and even 50s and 60s. The upper age limit for buying term insurance is generally 65 years. As you get older, you might have to pay higher premiums, but that shouldn’t stop you from choosing financial security.
How can buying term insurance benefit you at any age?
- Protection against critical/ terminal illnesses:
A term insurance plan can provide enhanced security to you and your loved ones in moments where life throws medical emergencies your way. Sometimes, you can do everything to maintain your health but can get diagnosed with an illness of a critical or terminal nature.
Illnesses like cancer, heart disease, and kidney failure, among others, are life-threatening and can put a complete halt on your life. Having a term insurance plan will ensure you receive extra financial support if this happens so that you and your family do not have to compromise on the quality of life
- Accidental death and disability coverage
Accidents always come unannounced, but ironically, have the most devastating consequences. You might not be able to control if and when they happen, but you can definitely lessen their impact with a term insurance plan. As your capacity to work might get hindered, you can find good use of the extra financial support afforded to you under the term plan. In the eventuality of you developing a physical disability due to an accident, you will receive an extra sum of money to maintain your anchor during tough times.
- Spousal and child security
When you are the sole income earner of your family, protecting your spouse and children might take first priority. As much as you would not like to think how their life would be after your unfortunate demise, you will have to be practical for their sake and prepare for this eventuality. With a term insurance plan, you can secure your loved ones in your absence.
So, even when you aren’t around, your spouse continues to receive term insurance coverage, and your child will continue to receive the term insurance benefits till they turn 21. The best part is that even if you buy the term insurance plan when you are unmarried/single, you can choose to get this spousal/ child coverage when you reach that stage of life.
To sum it up:
The ideal age to buy term insurance is in your 20s. However, if you cannot get term insurance at that age, you always have several more years to get it. If you cannot benefit from the affordability of premiums at an early age, there are other ways you can save while buying term insurance. For instance, you can buy term insurance online and get a discount.
Or you can check for a term insurance plan with a return of premium option, where the premiums you pay are returned to you if you survive the tenure of the term plan. And as you move through the different phases of life, you can choose to increase your coverage per your changing needs, ultimately securing your family throughout. To know more about term plan, long term savings and more visit PNB MetLife website.
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
PNB MetLife India Insurance Company Limited
Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
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