Life is uncertain. If there’s something that keeps us going is knowing that our family is safe and sound.
We always make sure to accumulate savings for our family’s safety and security in times of uncertainties and emergencies. Term insurance plans are like a one-stop solution for securing your family’s financial future in case of your absence.
But while buying a term insurance plan, there are two main factors that you must take into consideration. Those two significant factors are the sum assured and the duration of the term insurance plan.
How much should be your ideal coverage?
As per the rule of thumb, your ideal term life insurance coverage amount should be at least ten times your annual income. Here’s another formula to calculate your ideal coverage:
Income x Working Years = Coverage.
What is the best time to buy a term insurance policy?
As you would be aware, anyone between the age of 18 to 65 years can buy a term insurance policy. However, it is recommended that you must buy a term life insurance policy as soon as you can to safeguard your family’s financial future.
Owing to stable income and a low risk of death, young individuals are the first choice of insurers! To live a stress-free life, consider buying a term insurance plan as early as possible.
What are the main factors to consider while choosing the duration of a term insurance plan?
1. a) Age
The duration available to you depends on your age. Here’s an example. For instance, an insurance company offers a 30-year-old a term life duration of a maximum of 50 years. However, for a 50-year-old person, they might only offer 30 years as the maximum duration. Hence, it is advised to buy a term life insurance plan as soon as you can because the younger you are, the longer the duration is offered to you.
2. b) Liabilities
If you have taken loans, then your term insurance cover must be equivalent to the outstanding loan amount, and the duration must be equivalent to or more than the remainder of the EMI duration. So that even if you, unfortunately, pass away before the debts are paid off, your family won’t face the financial burden of clearing your debts as the insurance will come in handy.
3. c) Financial goals
Every family has financial goals that they want to achieve in their life. When it comes to choosing the duration of your term insurance plan, make sure the duration of it coincides with the goals. So that the goals of your family can be easily achieved even if you aren’t present.
4. d) Maximise the duration of your term insurance plan
It is wise to opt for the maximum duration available for your age. If you are a 30-year-old individual and think you need a life insurance policy for the next 30 years, then you must still choose a 40-year term. This is because life is unpredictable. Later on, if you realise at 60 that you need 10 more years of coverage, then you might not be able to get it. Also, if you want to discontinue your policy at the age of 60, then you can do that easily.
Click here to know more about the Terms and Conditions of Term Insurance Plans
While sum assured is a crucial factor, the duration of the term plan is also important. Your family will be provided financial protection until the end of the tenure. If this tenure falls short, then it might cause financial stress. Thus, it’s recommended to select the right duration.
Visit here to know more about Term Insurance Policy: https://www.kotaklife.com/online-plans/online-term-insurance-plans