A term insurance plan isn one financial product that can take care of literally all your financial risks. while it has no maturity value, it offers protection for a specified tenure at the lowest cost. For instance, a 30 year old man can get a 30-year cover of Rs 30 lakh for a monthly premium less than Rs.1000.
Term plans do not have any maturity or surrender value. As such, most buyers will look for one with the lowest premium. However, there are other factors one should consider before buying a term plan. Unlike endowment plans, the premium for term plans with longer duration is more. Still, choosing one that offers the maximum term makes sense. Once you find yourself bereft of financial responsibilities, you can always discontinue the cover. For a 30- year old, a term plan with a maximum term of 25 will not make much sense.
It is always good to look for an insurer who offers term plans with a high maturity age. Most plans provide coverage till the age of 60 years or 65 years. if you buy a cover when you are 30, it would normally see you through till your retirement, i.e., till you are 60. If you think you will have financial dependents even around that time, buying a term plan with coverage till 70 or 75 would be more beneficial.
The right time to buy a term cover is when one has financial dependents. Buying a cover at a younger age keeps the premium low as compared to buying it late in life. Term plans are the cheapest life covers. However, insurers do not sell them to just anybody. One has to be in good health and insurers put the prospective buyers through stringent medical tests before issuing polices. In some cases, they even ask for extra premium if health parameters do not remain within their underwriting limits. A 40-year old individual looking for a Rs. 1 crore policy might be denied a cover or allowed one with extra premium. As such, buying a term plan early in life is always cheaper.
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