Insurance: While taking life insurance, we often pay more attention to how much our sum insured should be, but when it comes to the term of the policy, we often get confused there. What should be the term of insurance, 60, 70, 80 or 99 years? But one thing you need to know before deciding on the term of the policy is that the longer the term, the more you will pay as premium during the term of the policy.
expensive cover
First let’s talk about what is term or life insurance? In terms of term insurance, in lieu of annual premium, the insurance company pays a lump sum amount to the family in case of untimely death of the insured.
This lump sum amount or sum assured helps the family to meet its expenses and meet future goals.
Now depending on the term of this insurance, the insurance company keeps on increasing your term insurance premium. Take for example the premium rates of iProtect Smart Term Cover from ICICI Prudential Life.
For a 40-year-old non-smoker, the cost of a cover of Rs 1 crore till the age of 60 will be Rs 19,063 per annum. If the cover is taken for a longer period of up to 75 years, the annual premium works out to Rs 28,083.
For the age up to 85 years the premium goes up to Rs 33,455 and till the age of 99 years the same annual premium will be Rs 55,503.
As you age, the company also increases the premium rates due to higher mortality charges. Even if you are healthy at the age of 70, the insurance company charges you a higher premium because of the risks of your age.
Then what is the correct term?
Opt for a term cover of at least 65 years. Now by the age of 65, you will have completed your financial responsibilities like home loan and child’s education.
The amount saved in all these years can be invested in some other place which you can think of leaving for your dependents later.
