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What Shall be the Suitable Policy Term of Your Term Insurance?

Updated On Jul 19, 2021

Purchased to protect your family from a financial crisis in the face of an unfortunate event, the term insurance policy should provide an adequate sum assured even to fulfil basic day-to-day expenses. Moreover, the policy tenure plays an essential part in determining the success of the term insurance policy. However, choosing the correct policy period can be pretty challenging. It negates the purpose of term insurance if it is too short, while if you select a period that is too long, you may wind up paying more premiums than necessary. Hence, it should be adequate enough to allow your family to become financially self-sufficient. So, to help you make the right decision, the following article aims to elaborate on suitable policy duration according to your age range. 

How Much Should Be the Policy Tenure?

One of the most important aspects in determining your term insurance rate is the term. The Policy Term is determined by how long you wish to continue providing financial security to your loved ones in the event of an emergency. Most insurance firms offer policies with terms ranging from 5 to 40 years or till age 99. However, it is advised that one should choose a policy term that corresponds to their retirement age. Suppose you aim to retire at the age of 60 and are currently 25 years old. In that case, you should get insurance with a 35-year term. However, some people who want to work as consultants until they are 65 to 75 years old may have a different retirement age.

What Shall be the Suitable Policy Term of Your Term Insurance?

You can refer to the points below to help decide a suitable policy term of your term insurance policy. 

Age - In 20s - You can choose to have your policy tenure as 40 years or until you reach the age of 99. When you're young, you may invest in reduced premiums for the next 40 years. Moreover, as  you're young, it's best to get a long-term policy because your duties and the number of dependents will grow as you get older.
Age - In 30s - Here as well, you can choose to have a policy tenure of 40 years or until you reach the age of 99. It depends on the number of dependents you have, how long you plan to work before retiring, and how longer your responsibilities will persist.
Age - In 40s - When you are in your 40s, you can choose to have the policy tenure of 40 years or until you reach the age of 99. Liabilities have a shorter time period by the time you reach your forties.
Age - In 50s - By the age of fifty, most of your children have grown up and become less reliant, and your obligations have decreased. As a result, you are recommended to choose a term of 25 to 35 years or till age 99.

Why Should You Prefer a Longer Term?

Premium rates are usually set in stone. Once you have purchased the product, it will remain unchanged for the length of the policy. Thus, this will save you from increased premium rates after policy renewal. Moreover, premiums are lower at a younger age and will remain constant throughout the period. Another factor is that your term insurance insurability will be guaranteed for the duration of the policy. As the age of the life assured increases, he/she becomes more prone to developing heart ailments, high blood pressure issues etc. So, if something happens to you within the policy duration, it will be taken care of through your policy. 

Take Away

You should choose a suitable policy duration after determining the period after which your dependents won’t need financial support. You can even consult a financial advisor to get a better plan with adequate sum assured for a sufficient period. 

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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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