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How Long Should My Term Insurance Cover Be?

Updated On Aug 05, 2021

Having the correct financial resources, such as a life insurance plan, can help soften the financial blow to your loved ones if something unfortunate happens. Term insurance protects you for a set length of time in your life. If the policyholder dies during the policy term, the plan's benefits are handed on to the nominees. Term insurance has the advantage of being less expensive by offering lower premiums than other insurance plans which provide maturity payouts. You should also consider how much money your loved ones will require if something occurs to you.

Moreover, it is vital to consider the length of a term insurance policy as it is to consider the coverage requirements. Most insurance providers cover life assured until they are 75-85 years old, while others may cover them until they are 99 years old. It depends on different insurance providers. Let's take a look at the ideal term plan coverage and durations for policyholders of varying age ranges. 

How Much Should My Term Insurance Cover Be?

Everyone will give you conventional advice when it comes to deciding the coverage of your term insurance plan, but it must be remembered that no two situations are ever the same. Your income, expenses, family size, lifestyle, and debts are all significant determinants, and no two people will have the same situation. You should keep future inflation prices in mind as well. Moreover, your dependents' future dreams and aspirations like higher education, marriage, etc., can also be considered while calculating your term insurance coverage.

How Long Should My Term Insurance Cover Be?

Here is the list of adequate term plan duration for each age group. 

  • Age Range - In 20s

Term insurance is purchased based on your present age and retirement goals. Let's imagine you are in your twenties and aim to retire at the age of 60; you will need a 35-40-year term plan. This will cover you till you reach the age you want to retire. Moreover, it must be noted the sooner you purchase a term insurance plan, the higher the coverage and lower the premiums will be. 

  • Age Range - In 30s & 40s

You will most likely marry and start a family while you're in your 30s or 40s. Hence, you should purchase term insurance now because you have individuals who rely on you. Again, depending on the sort of business and retirement plans or employment type, you should choose a 35-40-year term insurance policy at this age. Although the premium rate might be higher than the rate you could have gotten in your 20s, it can still be managed in your budget. 

  • Age Range - In 50s & 60s

When you are older, about 50-60 years old, your children will most likely be settled, and you will have less of a need to work and pay bills. You can choose a cheap term plan at this age because you have already lived more than half your life and can consider a 15 to 25-year plan.

Take Away

The coverage amount and tenure solely depends on your personal and professional needs and dreams and your family’s lifestyle and future goals and aspirations. Hence, it is essential to calculate the precise amount so that your family is not left stranded when the time comes. 

Also read 

What Is The Need To Purchase A Term Insurance Plan?

Should I Purchase Term Insurance Even If I Don't Have Any Dependents?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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