You may think that the term plan that suits your friend or relative would work for you too. But your friend’s health and age may not be the same as you. And these crucial factors affect the policy’s cost. For you, the best plan would be the one that offers you the highest amount while charging you the lowest. Apart from that, there should be additional benefits like critical illness cover, waiver of premium, accidental death, income benefit, etc.
Because you have to keep so many things in mind, choosing a term plan could be challenging for you. However, if you are the only earning member of your family, have small children, and have loans to pay, investing in a term insurance plan would be beneficial. Below are the things you should consider before buying the term insurance.
What Should Be My Policy’s Term?
If you are in your late 20s or early 30s right now, buying a term plan for 50 years can be unnecessary. Ideally, you should invest in policy until retirement. This is because as you advance towards retirement, your family would be less dependent on you. By the time you turn 60, your kid would settle down, you would pay the loans, and may also have a few assets in your name. You can choose a decreasing term plan in this case, where you will have to pay a significantly low premium amount as the sum insured decreases with time.
Advertisements Show Per Day Premium, What Are They?
You would have seen numerous advertisements talking about per day premium, which could be as low as Rs. 25 per day for 1 crore sum insured. But you should know that these numbers are specific to certain age group, health conditions and policy’s tenure. This policy could be tailored for a person in 20s without any medical condition like blood sugar, blood pressure, etc. whose policy term is 40 years. So, you should know that your policy amount and premium are affected by your health, age, and tenure of the policy.
When Is The Right Time To Buy A Term Insurance Policy?
After you turn 18, you can buy a term plan at any age you wish to because there is no maximum limit. But it is advisable to invest in a policy early because you would get a pocket-friendly deal. Not only your sum insured would be high but also your premium would below. Also, when you are in your 20s or 30s, you have more responsibilities as compared to when you are in your 50s and above. A 30-year-old is likely to have a family of their own as well as loans on their head. They would require a large cover so that the future of their kids is secure. But that would not be the case with a 50-year-old person.
The Bottom Line
Before buying a term plan, you should be aware of how term insurance policies work and what factors affect your plan. This way, you would be able to take maximum advantage of the policy.