Evolving Term Insurance needs at Different Phases of Life

Insurance is an integral part of our lives. It provides us with financial security and peace of mind in case of unforeseen events. As we move through different phases of life, our insurance needs evolve too. One type of insurance that can cater to these changing needs is term insurance. In this blog post, we will look at how term insurance needs evolve with every stage of life and why it’s important to have the right coverage at the right time. So buckle up and let’s explore together!

Insurance needs and different phases

Below are all the different phases of life and the insurance needs:

When you’re young and single (25-30 years old)

Contrary to popular belief, term insurance is not only for those who rely on family. In fact, it is encouraged to buy young in order to benefit from lower premium rates. Potential health risks and other hazards are often at bay at a young age, and thus one falls under a low-risk profile, qualifying for high coverage at a low price. For example, a 25-year-old salaried individual living in Delhi can choose a Rs 50 lakh cover at a monthly premium of Rs 400-600, which is quite affordable.

It’s easy to believe that you don’t have any dependents when you’re young. However, uncertainties can arise at the most inconvenient times, and you wouldn’t want your elderly parents to bear the brunt of it if something unfortunate occurred. In these trying times, term insurance comes to your aid and protects your family. Life insurance companies also offer term policies with a life stage benefit rider, which allows you to increase coverage during significant life events such as marriage or having children. When purchasing insurance, one should follow a basic principle: buy it when the risk is low. When the risk factor is high, obtaining insurance becomes not only more difficult, but also more expensive.

Also read: Top 10 life insurance companies

Married and starting a family (30-40)

By your 30s, you are most likely married, planning a family, or even raising small children. There’s a good chance your parents rely on you as well. This is a critical stage in life when expenses and responsibilities begin to mount and financial security is more important than ever. It is therefore recommended to have adequate coverage to pay off all of these liabilities in the event of an unfortunate situation. To adequately cover one’s dependents, one should consider at least a tenfold increase in annual income. A 35-year-old living in a metro city can obtain a sum assured of Rs 1 crore for a monthly premium of approximately Rs 1200- 1400. Consumers at this age still have a lower risk profile, but their financial reliance on them grows significantly. So, it’s best to act quickly and purchase a term plan that meets one’s needs at a reasonable premium.

Evolving term insurance needs at different stages of life

Middle-aged with growing children (40-50+)

This is the point at which a person’s disposable income usually increases significantly. On the professional front, they find more stability by rising through the ranks if they are salaried, or by expanding their business if they are self-employed. However, expenses always rise in lockstep with income, so this is also the time when they need to save up for one-time expenses such as their children’s marriage or higher education.

To put this in context, one requires coverage that can not only cover regular expenses at this stage, but also pay off any loans. The policy term should be the most important factor to consider at this age. You should only buy term insurance to cover your liabilities before retiring, and at the age of 40-50+, the likely retirement age is much clearer. Individuals at this stage should purchase coverage up to the age of 65-70 to protect themselves from potential liabilities before retirement. Choosing the right cover duration can also help customers at this age save money on term insurance premiums.

Retired or nearing retirement (55-60+)

This is the stage at which one is gradually releasing responsibilities and can decide to terminate their term cover. At this point, it’s natural to wonder if you survive the term, if your paid premiums will be lost. No, not always! If you had chosen one of the market’s new-age term plans, you would now have a one-time exit option. These plans allow the policyholder to surrender the policy when they believe their responsibilities are complete and receive the full amount paid, minus GST. So, one can keep their life insurance throughout their earlier years and then exit the plan while still getting good value for money. 

Unlike term-return-of-premium (TROP) plans, the new category of plans is priced the same as a regular term plan. Whereas TROP plans are at least 1.8x-2x more expensive. Customers under the age of 45 can purchase these plans. Which can be surrendered once they reach the age of 60. Alternatively, if a customer is 55-60 years old and wants to buy life insurance, annuity plans are the best option. Overall, term insurance is a non-negotiable requirement at every stage of life. So it’s critical to continually assess your needs and select a plan that meets them so that it doesn’t fall short when your dependents need it the most.

Also read: Difference between term and life insurance.

The bottom line

It’s important to understand that our insurance needs evolve with every stage of life. As we grow older and experience different milestones, the type and amount of coverage we require changes. Term insurance is a great option for those who want affordable protection for a specific period of time.
By being aware of your current life stage and future goals. You can make sure that you have the right term insurance policy in place to protect yourself and your loved ones. Whether you’re just starting out or preparing for retirement, there’s a term insurance plan that will fit your unique needs.
Remember to review your policies regularly to ensure they align with where you are in life. And if you ever have any questions about term insurance or other types of coverage. Don’t hesitate to speak with an experienced insurance professional who can guide you through the process.

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