40-Year Term Life Insurance - An Ultimate Guide | ABSLI

A term insurance policy acts as a financial blanket for your loved ones if something unfortunate happens to you. It will help them to live a life of stability without compromising their lifestyle. Term insurance plans provide risk coverage over a period of time as agreed upon while buying the policy. When you choose 40-year term insurance, what benefits will your loved ones get? Is it the right choice for you? Let us discuss this in detail!

What is term insurance?

Your family is dependent on your love and care. They might also depend on your finances to manage their living expenses. But what happens if you are no longer around? How do they take care of their financial goals, living costs, and lifestyle? A term insurance plan helps you with just that. It gives your family a fixed sum of money if you pass away during the policy tenure. They can use this amount to take care of their financial needs in your absence. Term insurance is the most simple and affordable way of creating a safety net for your family. You can choose a plan and customise the duration, cover amount, payout options, etc. to meet the financial obligations of your family.

What is 40-year term life insurance? How does it work?

As the name implies, it is a term insurance plan that covers you for 40 years. You can choose a sum assured based on your loans/liabilities, your family’s short and long-term expenses, financial goals, etc. You can also customise the policy with several benefits and features, add riders, and choose how you want your family to receive the claim amount - if you pass away in the middle of the policy period. For the policy to remain active and offer the agreed coverage, you will have to pay regular premium payments to the insurer. You can choose the premium payment term according to your convenience -

You should note that the policy remains active only until you pay the premiums regularly. If you miss out on paying the premiums, your policy might lapse.

Benefits under a 40-year term insurance plan

Your family will receive the sum assured as the death benefit in case you pass away during the policy term of 40 years. However, if you survive the entire policy term, you will not receive any money.

Let us understand this with an example:

Sylvia bought a term insurance plan for 40 years for a sum assured of Rs. 1 crore. She chose the lump sum payout and assigned her spouse Christian as her nominee.
● Scenario 1: Sylvia passes away in the middle of the policy tenure
Let’s say, unfortunately, Sylvia passes away in a road accident during the 12th year of her policy. In this case, Christian will receive the death benefit of Rs. 1 crore from the insurer as a one time payment.
● Scenario 2: Sylvia outlives the policy tenure
If Sylvia survives the policy term, she will not receive any maturity benefit from the insurer. Her policy will terminate after a period of 40 years.

Will a 40-year term life insurance plan be suitable for you?

Broadly, while choosing the duration of a term insurance plan, you must consider various aspects like your age, current income, savings in hand, expected future expenses, etc. Next, you should estimate the number of years you need to complete all your financial obligations. In other words, calculate a ballpark figure of the time required to create enough wealth for managing the rest of your life ahead. Typically, it means your retirement age, maybe with an additional buffer of 5 years. After these calculations, if you feel that a duration of 40 years will not suit your financial needs, you can opt for term insurance below or above 40 years - based on your requirement. Only if you think that a term of 40 years would suffice your needs, choose to opt for this plan.

Generally, a 40-year term life insurance can be suitable if you -

➔ Want your term plan to cover you beyond your retirement life. For instance, if you buy term policy in your 30s, 40-year term insurance will be active until you are 70 years old or more. This means that you will be offered coverage even after retirement.
➔ Want to pay-off long term debts and loans. If you have outstanding loans and do not want your family to get the burden of repayment, you can choose this plan to ensure their financial safety.
➔ Want to pay for a special needs dependent. If you have children who are financially dependent on you, you can choose a term plan with a limited time period until they can manage expenses on their own. However, if you have a child with special needs, you can invest in term insurance with a policy duration of 40 years or more to get risk coverage over a longer duration.

To conclude,

We have now come to the end of the article. We suggest that you make the best use of the information covered to evaluate if 40-year term insurance suits your and your family’s financial needs.