The Benefits of Term Insurance and The Right Age to Buy It

Dec 06, 2018 | 3 months ago | Read Time: 3 minutes | By iKnowledge Team

A term insurance plan is amongst the best investments to secure your family’s financial future, so it’s always best to start planning for their financial future early on.

Age can be considered as a base upon which an individual can predict one’s health in general. For instance, a young person does not have the same life goals at their age as that of an older person who has experienced most of what life must offer. But with the increasing number of road accidents and unfortunate events each year, is there really a gap between the longevity status of the young and the old? Keeping that in mind, there are measures to minimize the financial after-effects of death.

A term insurance is the perfect financial cushion for your family to rely on for monetary comfort in the event of your untimely demise. It provides for a huge corpus against cost-effective premiums. Benefits of a life insurance policy however, diminish with age and it is recommended that you buy one at the earliest. Let’s look at the benefits that are covered under a life insurance policy.

  1. Affordability: Life insurance policies are designed to be simple and affordable at the same time. The nominee receives the sum assured after paying a small amount as death claim post your demise. However, no benefit is payable if you survive the policy.
  2. Easy to buy: Easy advancements in technology and the customizability of a term life insurance plan make it only a click away. You can customize and buy a term policy online from the comfort of your home.
  3. Staggered claim pay-out: If you feel like the sum assured will be misused as a lump sum, you can opt for a staggered pay-off instead where your nominees receive a partial lump sum and monthly pay-offs to keep them from squandering the claim early on.
  4. Premium flexibility: You can opt for a monthly, quarterly or semi-annual premium payment. Some term insurance plans offer single-pay or limited pay options as well, more so they can fit every pocket.
  5. Riders: While term insurance does not cover health complications, there are various riders that you can opt for which do. You could add value to your cover by opting for one of these – accidental death rider, disability rider, critical illness rider, income benefit rider, waiver of premium rider, etc.
  6. Tax deduction: Most of all, you can avail tax benefits under section 80C of the Income Tax Act, 1961, for the premium paid and sum assured of your term insurance

The only question that remains is when to purchase a term insurance plan. To answer that, let’s look at the factors that would affect the decision for different age groups.

  • 20’s

During their 20s, an individual just steps into his/her professional life. With lesser debt and family responsibilities, term insurance premiums for such individuals are less expensive i.e. roughly Rs. 4,000 (approx.) annually.

  • 30’s

An individual, in his 30s, tends to have family and kids with greater responsibilities and liabilities. The premium will be slightly higher, given the family responsibilities. The amount is around Rs. 5,500 (approx.) annually during early 30s.

  • 40’s

During this stage of life, an individual’s long term financial liabilities like a home or car loan is paid-off. However, priorities and responsibilities change as per his financial conditions. The cover should be able to take care of your family expenses after your demise. Premiums too, are expensive and start around Rs. 9,700 (approx.) per annum by age 42.

  • 50’s

During this age, your biggest concern is a good retirement. Your kids are working, your family isn’t financially dependent anymore. At this age, the best option for you is to buy an endowment plan which will help you save and give you a lump sum amount on maturity. Term insurance premiums at this age are as expensive as Rs. 17,500 (approx.) annually from here on.

The cost of waiting to purchase term insurance is worse than not buying one at all. Medical conditions are more likely to develop as you grow older. Aegon Life offers a comprehensive plan, iTerm Plus that provides life insurance along with a cover for 36 critical illnesses. There are four options that you could choose from, Life Plan, Life Plus Plan, Life & Health Plan as well as Life & Health Plus Plan. Besides this, the company offers a wide range of plans that guarantee financial security of your loved ones.

To know about AegonLife’s life insurance products and saving plans, visit our home page.

II/Oct 2018/4523


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