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Important Factors to Consider While Choosing the Right Term Period for Your Term Insurance Plan

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  • 9th Jul 2019
  • 1,550
Important Factors to Consider While Choosing the Right Term Period for Your Term Insurance Plan

The importance of a term insurance plan can never be exaggerated enough. If you want to ensure the financial protection and security of your loved ones, it is time to invest in a term insurance plan. Primarily, you need to understand term insurance meaning. A term insurance plan is a pure life insurance cover, which gives you an opportunity to grow the corpus for a specific period. If the policyholder dies during the term of the plan, the beneficiaries will receive the death benefit. However, if the policyholder survives the term plan, there will be no maturity benefit.

Once you have decided that you want to buy online term insurance, you need to make the decision keeping certain factors in mind. The term period in your plan is very crucial. The policy period should be as long as you can give your family the freedom to become financially independent.

What are the important factors that affect your term insurance premiums?

Listed below are the factors you need to consider when buying a term plan.

1. Age

The lower your age, the lower will be the premium amount. Hence, buy a term plan at the earliest to make the most of low premiums.

2. Gender

Women tend to get numerous discounts and offers from insurance companies. This is because they have a lower risk of death associated with their policy as compared to men.

3. Sum assured

The premium amount will be higher if the sum assured is higher because the coverage will be more than what is expected.

4. Lifestyle

If you are a non-smoker and maintain a healthy lifestyle, you will get a discount on your premium amount.

5. Payouts

The amount of premium will differ based on the payout. If you choose an increasing sum assured, the premium will increase over a period of time.

6. Term

If you opt for a longer tenure, the premium amount will be high and this is the key factor in determining the amount of insurance premium. The term will depend on how long you wish to provide for your family in case of an unfortunate incident. Many companies offer a policy term between five years to 40 years.

It is advisable for every individual to opt for a longer policy term. You also need to consider your retirement age when choosing the term period. When you choose a longer period, you can enjoy fixed premium rates. Hence, you will have to pay the same amount of premium throughout the term of the insurance policy. Moreover, if you buy a policy at a young age and opt for a longer tenure, you will be able to enjoy lower premiums throughout the term. You will get a cover for life at a low premium amount. Lastly, you will remain insured throughout the policy term.

When you choose the term period for your plan, you need to consider your liabilities. You need to assess that until what period will these liabilities exist. In addition, you need to estimate that your children will become independent at what age. Additionally, you need to analyze that up to what age you will be able to continue working. Majority plans mature at the age of 65 and you can decide the term period of your plan accordingly. Most investors opt for term insurance for a longer term period because it gives a life cover at an affordable cost.

- A Consumer Education Initiative series by Kotak Life

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