What Should Be the Duration of My Term Plan

Many term insurance buyers often have little or no idea about choosing the right duration of the plan. Read on to know more about choosing the right duration for a term plan.It is said, the most crucial decisions are not easy. This rightly applies to choosing the term insurance duration. If you choose a short-term plan, it defeats the whole purpose of buying an insurance cover. If you pick a plan with a longer duration, you will be paying more premium than you should.In India, most people tend to buy a long-term insurance plan for 10-20 years, believing that it is best to get long-term protection. But, there is no real thought behind it; people choose the term insurance duration randomly.Remember, the primary purpose of a term insurance policy is to secure your family’s financial future and give your dependents the support until they become financially independent. This means, when you are not there anymore, the family must be able to afford the rent, school/college fees, pay off the debts, and maintain their regular lifestyle.Generally, the insurance companies in India cover the individuals to a maximum age of 75 to 80 years. Some insurers even cover up to 99 years; it varies from insurer to insurer. So, the insurance term may vary from 5 to 40 years based on your age at the time of buying the policy.If you are looking for the best term insurance policy , you must consider the following factors to decide the term insurance duration.

One of the most important factors to consider while choosing the term life insurance duration is the liabilities or debts you owe. For example, if you have availed a home loan for 20 years, experts recommend buying a term insurance policy for at least 20 years or more. This will give your family the financial cushion against the liabilities if something unexpected happens to you.

The term insurance duration has a direct impact on the premium amount; policies with longer duration tend to be more expensive. So, suppose the premium for the term insurance duration you desire is putting a strain on your finances. In that case, it is advisable to adjust the coverage amount and the tenure so that the premium is affordable, and you get maximum benefits from the plan.

The family profile plays a critical role in determining the term insurance duration. If you have a 5-year-old child and your goal is to provide cover for their education, it is better to choose a policy for 18-20 years. But, if your family members are financially independent, you can opt for a short-term plan.

Last but not least, you must consider your current age to determine the duration for the term plan you want to buy. For example, if you are a 35-year-old individual, you can choose a term plan for 25 – 30 years. But, make sure that your insurance term lasts until your retirement; if it ends early, the whole purpose of the insurance will be defeated.

So, now that you are aware of the various factors that you must consider to choose the right duration for a term plan, make sure that you do your research well and select a plan that fits your needs.

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.