Life insurance is an essential part of your family's financial protection, and it's important that you choose the options that will suit your family's needs.
Your term insurance term is one of the most important factors you should get when purchasing a new term policy. Let's take a look at some of the points that will help you choose the right mandate.
- Your debts and commitments
Ideally, your term life insurance should comfortably cover your debts and even after that your family should have a decent amount of money to support themselves financially.
Here, it is important that your term insurance covers the entire duration of your loan repayment schedule.
For example, suppose you have a home loan that will be paid off in 10 years. Then your term insurance should pay off well with ten years or more of tenure. This will help your family cover the entire loan amount should anything happen to you before the loan is completely foreclosed.
- Affordability – Affordability is another important factor. A longer tenure could mean a bigger premium. In this situation, it is advisable not to compromise on the amount of insurance. Instead, try to get term insurance for a shorter term and when you need to renew it, you can get a term plan for a longer term, if it's affordable for you at that time.
- Duration of support – It is important that you choose a term that will last until the time when you think your family will need your financial support.
For example, if your child is now 15 and you think they will be financially independent at 25, you might consider choosing a ten-year tenure with a high sum assured.
Such a choice is considered more ideal than choosing a longer term with less sum assured.
- Purpose of insurance – If your term insurance has a specific purpose, you can also consider that when choosing a term.
Using the same example above, if your loan term is 10 years, it is ideal that you are insured for a large amount that covers the loan and your family's financial needs, with a term of at least less than 10 years.
- Your age
If you are young, insurance premiums will be significantly lower. Indeed, insurance companies evaluate their premium according to the risk. At a younger age, your health could be optimal and the chances of your insurance being claimed are considered lower.
So if you're 20, choosing a longer term could save you some money.
You can also add an endorsement that guarantees renewal without a medical visit and enjoy your optimal health.
At the same time, if you are a middle-aged person, the length of tenure should depend on the specific purpose of your term insurance.
For example, if you have debts that you think you can only pay off within a certain period of time, you should have a long-term policy with a high sum assured for that period.
- Age of dependents
The age of your dependents is another factor that should play a role in determining the length of your term insurance.
If you have children, it is always ideal to take out insurance for a longer period, at least until they are adults. This will ensure that you cover their education and living expenses should you ever have to leave them behind.
But, at the same time, in your old age, you can opt for a shorter tenure, especially if your only dependent is your spouse.
Good term insurance means you've chosen the right options, including the length of your term insurance. It might get confusing for you, especially when there are a lot of factors involved.
One way to make it easier for yourself is to do some research. There are many resources available online and it is advisable to make best use of them.
Also, hiring an insurance adjuster could help you a lot. Most insurance broker websites will provide you with valuable advice.
If you are not yet insured, get proper advice and be insured today!
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