The Ultimate Guide: When to Buy and How Much Premium to Pay for Term Insurance

Sep 04, 2019 | 2 months ago | Read Time: 3 minutes | By iKnowledge Team
When to Buy and How Much Premium to Pay for Term Insurance

Insurance can be a daunting task if you are unsure about the plan and your requirements. While purchasing a term plan, know that it is a death benefit plan to ensure your family is financially stable in your absence. It is one of the simplest forms of insurance and is a safety net especially if you are the sole earning member of your family.

Factors to look for when buying a term plan

When you choose a term policy online or offline, there are various factors that you need to consider such as:

  • Premium
  • Age
  • Flexibility
  • Low claim rejection
  • Riders

From these factors, age and premium go hand in hand as the premium for your term plan depends on your age, irrespective of gender. Also, smokers must pay higher premiums.

So, if you are planning to quit smoking then it will surely get you a lower premium and help you live a healthy life. For instance, Sam, a 25-year-old, non-smoker recently graduated and is now planning to go overseas for future studies. He is headed to Australia for his masters and has chosen an education loan to meet his financial needs.

Term policy to your rescue at each life stage

  • In your 20s: Do you think a term insurance policy is required for someone as young as Sam? Yes, if you are in your 20s and have few debts to pay off such as education loan, it is recommended to purchase a term plan. In an unpredictable scenario, a term insurance policy will help you pay off your debt rather than putting your parents at risk.  Additionally, when you are younger, you pay a lower premium compared to other age brackets as the chances of critical sickness and death are low.
  • In your 30s: Life evolves at every stage. When in your 30s, you have immense responsibilities like home loans, car loans, and other long-term commitments, especially if you are the sole earning member. This is the time you need to purchase a term plan to ensure that your family members live a stable life even in your absence.
  • In your 40s: When you are in your 40s your income gets stronger and so does your standard of living and expenses. By this age, you must have covered your home loans and other debts. But will still have certain responsibilities like children’s higher education, retirement plan, health plan and more. This will require a strong financial corpus and therefore it is recommended to buy a large cover. Don’t delay further as you will end up paying more premium. If you purchase a term plan for Rs 1 crore in your 40s, you will pay Rs 15,100 per annum for a term of 30 years. However, purchasing a term plan after crossing 50 will cost you a higher premium with less coverage.

Does Age and Premium Play a Role?

Age is an important factor while calculating the premium for a term insurance policy. It is an assumption that a young person is healthy and less likely to die of natural causes. So, when you buy a term plan at a younger age you pay lower premiums for a longer duration of time. As you grow older, your body gets prone to diseases and other age-related ailments. Therefore, the insured ends up paying a higher premium.

Why term insurance?

Premium paid towards a term insurance policy gives you tax benefits under Section 80C. The lower premiums make this the cheapest plan in the market. While the sum assured is higher as compared to the amount paid through premiums. Also, your premium is locked for the rest of the term. If you have add-ons or riders, you pay a slightly higher premium. Riders also enhance your coverage. However, it is recommended you purchase an add-on only if you require it. Therefore, if you purchase a term insurance at a young age, you save on premium, get a cover for life, and can pay premiums for a longer duration of Time.

Whether you are young as Sam or have crossed your 50s, it is recommended that you purchase a term insurance to ensure financial stability in your absence. With Aegon Life’s comprehensive term plans and additional benefits you can attain this financial stability. 

To know about Aegon Life’s life insurance products like health insurance and other products, visit our home page.


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