Utility of Term Insurance for People Across Age Groups and Classes

Term insurance, the most common form of life insurance, not only pays your family a handsome sum of money in case of your death but is highly cost-effective too. The premiums payable in a term insurance plan remain fixed throughout the policy term. It is unlike other insurance plans where premiums rise as time goes on. While most financial advisors recommend an early buy of term insurance, we go one step further by demonstrating its importance for people of different age groups and classes. Let’s begin by showing the utility of term insurance plans for early earners.

How Can Early Earners Motor Along with Term Insurance?

Getting their first salary remains a special moment for many. While some spend from their salary injudiciously, others use it smartly by investing in financial instruments such as term insurance plans. The benefit of locking a term insurance deal at an early age is a much lower premium. The younger you are the lower the premium and vice versa. Since the premium remains fixed throughout the policy term, buying this plan further adds to the savings of early earners who may not get a bumper salary in the beginning.

Special Premium Rates for Females and Non-smokers

Age is not the sole factor in deciding term insurance premium rates for individuals. Factors such as your gender and smoking status also matter. Female policyholders are expected to be offered a lower premium compared to their male counterparts. The extent of premium reduction for females would, however, depend on the terms and conditions of the particular policy. The same goes for non-smokers who get lower premiums than smokers. And the reason for the same is obvious amid expectations of non-smokers leading a healthier life than smokers and raising much lesser claims than the latter.

Term Insurance for Senior Citizens

Term insurance is open to people aged above 60 years too. Most insurance companies keep the maximum entry age limit to 65 years, helping many retirees secure their dependents in their absence later.

Customized Premium Payment Offers Only Add to the Appeal

Term insurance accounts for the loss of income for your family in your absence. But income uncertainties can exist even while you’re working. You might be jobless for an extended period or face a physical disability owing to which you can’t work and earn. Such situations could make premium payment one heck of a thing to ensure. Failing to ensure the same could undo your hardwork of spotless premium payment made before.

Thankfully, insurers keep customizing plans for these scenarios too. On the premium front, you could get three options – Single, Limited and Regular. A single premium plan is understood by the name itself. An individual has to pay a one-time lump sum premium. Whereas, in a limited plan, one needs to pay the premium for a period shorter than the chosen policy term. In the case of a regular plan, you will need to pay the premium for the entire policy term. What’s common among these plans is that the coverage continues till the policy term.

So, if you feel you can’t pay the premium spotlessly throughout the policy term due to irregular incomes, contemplate using a single or limited pay plan. Choosing between the two will depend on your affordability. A single premium amount will, naturally, be a big one. So, you need to have that lump sum to pay in one short. Whereas the premium of a limited pay plan will be comparatively more than that of a regular plan.

Lifelong Plans Draw People Even Further Towards Term Insurance

As term plan comes into play upon the death of the policyholder, the policy term grabs attention like no other. In case you survive till the policy term, you won’t get anything unless you have a return of premium plan where you get back the paid premiums upon survival till maturity. But the ‘Return of Premium’ variant may not be financially feasible for you. The reason being the premiums can be 2-3 times more than that of a pure term plan. Insurance companies recognize the need for a long policy term by offering plans that last till 99 years of your age.