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How to Choose the Duration of a Term Insurance Plan?

Published On Aug 19, 2021 10:00 AM By InsuranceDekho

As life is full of uncertainty, having a life insurance policy in place to protect your family financially in the case of your death is essential. There are various types of life insurance plans in the market: term insurance plan, whole life insurance plan, endowment plan, unit-linked insurance plan, money-back plan. Term insurance should be the top priority if the policyholder's primary goal is security. It is the purest kind of life insurance, providing the entire sum assured in the case of the policyholder's death, but nothing if the policyholder survives the term of the policy. However, the sum assured is relatively higher at a modest cost. Hence, the length of your term plan should ideally match the number of years your family will be financially reliant on you.

How to Choose the Duration of a Term Insurance Plan?

Before choosing on the term insurance plan's tenure, you can consider the following factors.

1. Age

One of the most important factors that determine the life insurance price and the policy tenure selection is age. Term insurance contracts are available in 15-year, 20-year, 25-year, and 30-year terms. Here, opting for a long term at a younger age is recommended because if you choose a term plan that expires long before your planned retirement age, the main point of term insurance would be defeated. Thus, if you are 25 years old, you can choose a policy length of 35 years (until the age of 60, i.e., your retirement.)

2. Family Goals and Dependents

Your family composition heavily influences the duration of the term plan you choose. You will have various financial milestones and goals to meet as a family. You can align the term plan's tenure with these crucial milestones to meet your financial obligations even if you are not present, thanks to the sum assured that would be paid out. For instance, if your child is 5 years old and the goal is to provide coverage until he/she completes school, the length might be 18 to 20 years. If the goal is to supply until the child's marriage, the term plan's duration must be increased.

Must Read: Understanding The Role Of A Nominee In Life Insurance

3. Loans & Debts

You take out personal loans, home loans, car loans etc., all your life. The last thing you want to happen to your family is for them to inherit a debt. You can ensure that your dear ones are financially secure by selecting a term plan that spans the debt's liability period. If you have debts or loans to pay off, your term insurance coverage should be equal to the outstanding loan amount, with a duration equal to or greater than the balance EMI period. For example, if you have a 15-year home loan, your life insurance coverage must last at least that long.

4. Affordability

Longer-term term life insurance policies are more expensive. Although purchasing a life insurance policy through a term plan is an investment, you must ensure that it does not put your money at risk. After all, in order to receive insurance benefits, you must pay the payment on time during the term. Suppose the premium for the duration you choose is putting a burden on your finances. In that case, you may consider adjusting the tenure and coverage amount to find a happy medium while still getting the benefits of term insurance.


Individual needs and preferences should determine the duration of a term plan. So, before you buy a term plan, be sure you assess your responsibilities and current income. Moreover,
it would be best if you chose a term plan duration that corresponds to your retirement age.

Also Read: Who Should Be The Nominee For Your Term Insurance?

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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