Buying Term Insurance? Here's a Guide for Age and Premium

When buying a new term life insurance policy , many people have this confusion about what is the ideal age to purchase term insurance? If you believe you can buy a policy at any time and get the coverage you need, you may be highly mistaken. Many experts recommend the life insurance buyers to follow the rule of thumb, which says the ideal time to get a life insurance cover is when you are young.There is a simple logic to the above rule – when you are young, you are most likely to be healthy, which means you are less likely to suffer from illnesses, and the insurer has lesser liability. Therefore, the insurance companies provide a life cover at a lower premium compared to those in their late 40s or 50s for the same plan.

The insurers consider your age as one of the critical factors to determine the term policy premium rates as the older you get, the higher is the risk of passing away. In simple terms, an insurance company considers a person who is aged 45 to have lesser life expectancy than a 30-year-old individual even though they both may be in good health. On average, the term life insurance premium increases by 8-10% each year.Benefits of buying term insurance when you are young

• Secure your family's financial future at an affordable premium A term insurance policy is an excellent way to secure your loved ones' financial future after you are gone. In the event of your unfortunate demise during the policy term, the insurer will pay a lump sum amount to the family, which can be used to repay the debts (if any) or for regular household expenses.The insurers fix the premium at the time of buying the policy, and it remains unchanged throughout the policy tenure. So, the younger you are at the time of purchase, the lower will be the premium.
• Helps plan for your future When you are young, you may not have many financial responsibilities or financial dependants. This is an ideal time to plan for your future and think about buying term insurance policy. In the future, when you get married and have children, the policy can help your family live a financially independent life in the event of your unexpected demise.Thus, it is quite evident that age plays an important role in the life insurance policy's affordability. If you are not sure how to get started with buying a new policy, you can use the life insurance premium calculator to understand how much premium you can afford to pay every month and the coverage you need.

Lastly, it is paramount that you read the policy documents carefully to understand the terms before making the final purchase decision. Also Read: What is Term Insurance?

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.