What is the Right Age to Buy Term Insurance Plan?

Date 03 Sep 2023
Time 5 min read
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If you are the primary earning member of your family, you have a few unstated obligations and commitments towards your spouse, children, and parents. You want them to dream big and succeed at every milestone.

But if you, God forbid, aren't around anymore, how will you meet those goals and commitments? This is where term insurance has established itself as a necessity. It is the simplest and cheapest form of life insurance that offers a fixed sum to your family in case of your untimely demise. It financially supports your family, helping them dream about their future, while efficiently securing the unfortunate downside of your absence.

Fine, you have understood the importance of buying term insurance. But the next question among a dozen other questions is the timing. When to buy term life insurance or when should I buy term life insurance? Should you buy it as soon as you are eligible, or should you buy based on a certain milestone in your life?

Let’s see!

Importance of Purchasing Term Plan Early

Purchasing a term plan early can have numerous benefits, both for the insured person and their dependents. Here are some reasons why it is advantageous:

  • Lower Premiums: Age is a significant factor in determining life insurance premiums. The younger you are, the lower your premiums typically are. This is because younger individuals are seen as less risky to insure due to a lower probability of health issues. So, purchasing a term plan early in life can lock in these lower premiums for the duration of the term.

  • Coverage During Critical Years: Buying a term plan early ensures financial coverage during the critical years of life. This period is usually when major life events occur such as marriage, having children, purchasing a home, etc. In the unfortunate event of the insured person's demise during this period, the policy payout would offer a financial safety net for their dependents.

  • Comprehensive Coverage: Insurance companies tend to offer more comprehensive coverage to younger individuals, since they often have fewer pre-existing conditions. As we age, the risk of developing health issues increases, and insurance companies may exclude certain conditions from the coverage or charge additional premiums.

  • Security against Future Health Risks: As mentioned, with age comes an increased risk of health problems. If an individual develops a serious health condition before purchasing a policy, they might be denied coverage altogether. Getting insured early can avoid this risk.

  • Long-term Financial Planning: Life insurance is a crucial aspect of long-term financial planning. Having a term plan from an early age allows you to plan your finances more effectively, knowing that you have a safety net in place.

  • Peace of Mind: Having life insurance coverage gives you peace of mind knowing that your loved ones are financially protected should anything happen to you. This peace of mind is invaluable and is a key reason for getting a term plan early.

In conclusion, purchasing a term plan early has numerous benefits. It is a cost-effective way to provide financial security for your loved ones, and it can also serve as an important component of your overall financial strategy. It's recommended to consult with a financial advisor to choose the right term plan that suits your needs and lifestyle.

What is the best age to buy term insurance?

Wondering what is the best age to buy term life insurance?

Well, there isn't a single "best age" to buy term insurance that applies to everyone because the right time depends on individual circumstances. However, it's generally a good idea to consider purchasing term insurance in your 20s or 30s.

This is because premiums for term life insurance are significantly lower when you're younger and healthier. The risk of disease increases with age, and this can lead to higher premiums or even denial of coverage. If you purchase term life insurance when you're young, you'll lock in a lower premium for the duration of the term.

Another reason why this might be a good time is because it's often when people have significant financial obligations. For example, you may have a mortgage or other debts that would need to be paid off if something happened to you. Or, if you have or are planning to have children, you'll want to ensure that they're taken care of financially.

However, everyone's situation is different. It's important to assess your financial obligations, dependents, health, and other factors when deciding when to purchase term life insurance. Also, it's advisable to consult with a financial advisor or insurance expert to guide you through the process.

How to Select the Right Term Insurance According to Your Age?

Selecting the right term insurance according to your age involves several considerations. Here are some age-specific tips to help guide your choice:

  • Young Adults (20s to early 30s): At this age, you're probably in good health, making insurance premiums quite affordable. This is a good time to lock in a long-term policy at a low rate. You can consider this the “term insurance starting age”. Opt for a policy term that covers you at least until your retirement age. Consider additional riders like critical illness or disability, especially if you have a family history of certain medical conditions.

  • Mid-aged (mid 30s to 40s): If you have dependents like a spouse, children, or aging parents, you should have a substantial coverage amount to ensure their financial security in your absence. This coverage should account for your debts, like mortgages or loans, future expenses like children's education or spouse's retirement, and loss of income. You can also consider a policy with premium return benefits if your risk appetite is low.

  • Older Adults (50s to 60s): If you haven't purchased a term insurance policy yet, it might be more costly now due to the increased risk associated with age. In other words, if you’re wondering “at what age does term life insurance go up”, the answer is around this age bracket. However, it could still be necessary, especially if you have dependents or debts. A shorter-term plan may be more appropriate at this stage. Look for a policy with guaranteed# acceptance if you have health issues.

  • Retirement Age and Beyond (60s and above): While there is no maximum age to buy term life insurance“, buying a new term plan at this age can be expensive and challenging, especially if you have health issues. Instead, consider senior-specific life insurance policies or convert your existing term plan into a permanent one, if that option is available. The focus should be on leaving a financial legacy or covering end-of-life expenses.

Remember, regardless of your age, always choose a reputable insurance company, read the policy terms and conditions carefully, and be honest during the life insurance application process to avoid any complications later. Also, regularly review your insurance needs as your financial situation changes over time. It's always advisable to consult with a financial advisor to make the most suitable choice according to your needs.

Wrapping up!

Getting a term insurance policy is a wise decision that might be the first of many important moves in mapping your financial future. As we discussed above, there is no best age to buy a term plan. The main purpose of term insurance is to provide financial security to your loved ones in your absence. You should consider buying it if you have financial dependents, or unsettled loans/liabilities.

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Buy ₹ 1 Cr Term Cover @Rs.492/month
for Salaried Individuals¹
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Buy ₹1 Crore Term Cover @ @Rs.492/month for Salaried Individuals¹
ABSLI Salaried Term Plan
Exclusively For Salaried Individuals
4 Plan Options
Life Cover upto 70 years
Optional Accelerated Critical Illness benefit
Inbuilt Terminal Illness Benefit
Life Cover
₹1 crore
Premium:
₹492/month¹
  • Disclaimer

    ABSLI Salaried Term Plan (UIN:109N141V01) is a non-linked non-participating individual pure risk premium life insurance plan; upon Policyholder’s selection of Plan Option 2 (Life Cover with ROP) this product shall be a non-linked non-participating individual savings life insurance plan.
    1LI Age 21, Male, Non Smoker, Option 1: Life Cover, PPT: Regular Pay, SA: ₹ 1 Cr., PT: 10 years, Premium paying term: 10 years, Annual Premium: ₹ 5900/- ( which is ₹ 491.66/month) Premium exclusive of GST. On death, 1 Cr SA is paid and the policy terminates.
    Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
    # Provided all due premiums are paid.
    ADV/8/23-24/1645

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