Life is a constant change: re-evaluate your Term Insurance Plan

Life is a constant change - preparing for the inevitable and expecting the unexpected. Your needs and requirements too, undergo a significant change at various life phases and this includes the insurance aspect as well. Hence, it is essential to review your term plan to ensure that it befits the various life events happening at each stage.

Read on to know how you and your family can be adequately covered from your early 20s until retirement.

In your early 20s

Consider buying a term plan in your 20s only if you have dependent family members or liabilities such as education loan to take care of. Your dependents can utilize the payout towards paying off your debts in your absence. Yet, buying term insurance plan earlier on has its own benefits. For one, it comes at a low premium. Term insurance plan for a 25yr old, with sum assured of Rs.50lacs would cost you around Rs. 216 p.m. Consider buying a term insurance plan that is 15X of your annual income. Also, opt for a term plan with longer tenure that would cover you till the age of 70-75yrs. 

Between 30s and 50s

While lower sum assured would have been sufficient in your 20s, it may not serve the purpose in your 30s as you contemplate getting married or are already married and are planning to extend your family. As you progress towards 40s and 50s, you may find yourself thinking about long term goals such as your child’s education and marriage and your retirement. Hence, your term cover should be sufficient enough to meet your family’s financial needs later on.

Unfortunately, only few insurers give you an option to increase the sum assured of your already existing term plan; provided you opt for this feature at the time of buying the policy. Else, your only option will be to buy another term plan with higher sum assured. You could further upgrade it by buying add-on covers alongside, such as critical illness rider or waiver off premium rider etc. While the former would provision for any lump sum payout upon diagnostics of illnesses that are terminal in nature, the latter would waive off future premiums in case of death or even disability.

In your 60s

I would not recommend you to buy a term plan in your 60s, unless you have dependent family members and existing loans and liabilities to take care of. That’s because buying term plan in your 60s would cost you dearly. For instance, term plan for a sum assured of Rs.1cr, would cost you around Rs. 2, 565 p.m. as premium vis-à-vis someone in their 30s who would pay just Rs. 400 p.m. for the same sum assured.

If you have saved enough during your employment years and have other insurance plans to support you during emergencies, then a term plan would not be necessary at all post retirement.

The final word

Life throws a lot of curve balls but that should not deter you from planning for financial protection as you might be under-insured. Therefore, take out time to review your term plan vis-à-vis your phase of life and goals. This will help you assess how much additional cover is needed to support not only your goals but also your responsibilities and liabilities.

- by Yashish Dahiya – CEO & Co-founder, Policybazaar.com