When you have dependents or liabilities, one of the critical financial instruments to purchase is life insurance. It ensures that, in case of your sudden demise, your loved ones have a financial cover to rely on. It is important to have sufficient financial cover that takes care of the needs of your loved ones, along with any outstanding debt. Term insurance is one life insurance type that is known for offering a huge financial cover to the policyholder for a comparatively low premium.
What is term insurance?
Term insurance is a type of life insurance that offers life coverage to the policyholder for a fixed period. When you buy a term plan, you choose the number of years you want to insure. To ensure your life for that fixed tenure, you are required to pay a premium. In case of your demise within the tenure of the policy, the nominee of your policy will receive the financial benefits. It acts as an income replacement by reducing the financial burden a family faces when their breadwinner is no more. There are also several term insurance tax benefits one gets when they buy a term plan.
Financial security allows the loved ones of the policyholder to live a good quality of life along with fulfilling their goals. Also, it ensures that any of their outstanding loans do not burden the loved ones of the policyholder. With the help of a term insurance premium calculator, you can get an estimate of the premium you need to pay for your desired sum assured. Term insurance offers the highest coverage for low premium rates when compared to other types of life insurance.
How to customize your term insurance plan?
Every individual who is buying a term plan is in a different stage of life and has different needs and expectations. There is no single best term insurance plan for all as everyone’s needs and wants are different. Here is how you can go about customizing your term plan depending upon the stage of your life to reap the maximum benefits:
In your early 20s
When you earn and have a stable job, you have practically entered adulthood. Most individuals during this stage of life have no liabilities or anyone who directly depends on them. It allows them to work on their financial independence and invest more freely. This is because the upcoming stages of your life usually come with more responsibilities, whether it be starting a family or parenthood. The earlier you buy term insurance, the lower your premium will be. This is because the possibility of a person losing their life young is quite less compared to when they grow older. Buying a term plan in your 20s allows you to back up a huge coverage on a relatively low premium for the entire policy tenure.
In your late 20s and early 30s
Most people start a family in their 30s and this stage of life has different financial requirements compared to when you were single. When you get married, you have a financial responsibility towards your spouse, especially if they do not have any source of income. You must choose a term insurance plan that ensures that it will take care of your partner’s financial well-being along with the liabilities if something was to happen to you. This is because, in this stage of life, most people increase their liabilities with expenses associated with a newly married life, like buying a house. Also, there are several term insurance tax benefits as the premiums you pay for them are exempt from taxes.
In your mid-30s to mid-40s
The birth of a child comes with unmatched joy and responsibilities. Being a parent, it is your responsibility to provide for the growth and development of your child. Term insurance is one of those reliable instruments that secure the future of your child, even in your absence. Use a term insurance premium calculator to access the coverage required that fulfils the financial requirements of your child and spouse. Also, if you have ageing parents who depend on you, increase the sum assured accordingly. It is essential that, while estimating your sum coverage; you consider all dependents.
In your late 40s and early50s
If you are approaching your retirement, your primary aim should be to create a hassle-free retirement life. While buying term insurance, you must choose coverage that will take care of any outstanding liabilities you have. Also, the coverage at this age ensures that, in case of your sudden demise, your coverage leaves behind a legacy for your loved ones.