Life is full of uncertainties. You may have a perfect picture in mind, but it often does not work that way. The biggest concern for most families in India is their financial future. If you are a single earner in the family, you may be more worried about the future. An unfortunate event can lead to devastating results, putting the financial stability of your loved ones in jeopardy.
To successfully take care of this issue, you can consider buying a life insurance policy. There are a variety of life policies available in the country. However, a term life insurance plan can be the most suitable choice due to its affordability. If you are wondering what is term plan, read on to know more.
Term insurance plan – An overview
A term plan is a simple life insurance policy. It is an agreement between you and the insurer. As per this arrangement, the insurer will pay your nominees a lump sum in case of an unavoidable incident resulting in your absence. If your nominees make a legitimate claim within the term insurance policy tenure, the insurer will pay them the sum assured. If the policy term is over or the insurer settles a claim, whichever happens first, the term life insurance policy will terminate. The tenure is fixed between you and the insurance company at the time of policy initiation.
Term insurance in India is a popular choice due to its low premiums and considerable benefits. While buying it, people often find it hard to decide the right tenure for their term policy. If you are in a similar situation, we are here to help you identify a suitable period. It depends on a few factors, like:
Before you buy a term plan, it is vital to know the term insurance age limit eligibility criteria for your insurer. Generally, the minimum age for buying a term plan is 18, and you can get the cover until you are 70 years old. There are also minimum and maximum term limits, which may vary among insurers. Your term policy’s ideal tenure depends on your current age. If your present age is 40 or less, it will be wise to opt for the maximum policy tenure. It will give you peace of mind about the family’s monetary future. If you are over 40, consider buying a policy with a shorter term. You may not require protection when your children start earning.
- Number of dependents
The type of dependents you have and how many people rely on you financially are two of the most important factors for deciding the term policy tenure. The more dependents you have, the longer your policy term needs to be. If you have family members, who are financially dependent on you, opt for the maximum policy tenure. However, if you believe that your dependent children will become self-reliant after completing their education, you can select a policy term that extends only until then.
- Financial liabilities
The purpose of a term life insurance policy is to provide your loved ones with enough money to maintain their standard of living. However, this can become challenging if you leave behind financial debts. For example, if you have taken a home loan or car loan, it is crucial to ensure that your family does not have to face the burden to repay these liabilities. Your children’s education is also an important financial obligation. When you buy term insurance in India, make sure that the tenure is long enough to cover all the liabilities, even if you are not there.
The term policy’s tenure and the sum assured, determine your payable premium. Hence, when you are deciding on the policy term, keep your budget in mind.