There are many kinds of insurance that you need and different reasons why you need them. One of those that you may not know about is term insurance. What is term insurance? Why do you need it? What is the right age to buy term insurance? These are some important questions you need to ask yourself. Read on, to find all the answers.
First and foremost, what is term insurance? This is a type of life insurance in which the person buying is covered in case of death within a certain period specified on purchase. When buying this kind of insurance, you specify the period for which the insurance is valid. If the insured dies within the policy tenure, the sum assured is paid out but if he/she does not die, no pay-out is made. The policy tenure could be any number of years. The exact years and conditions will depend on the company selling you the term insurance and your needs. There is no savings component or any additional benefits; just a death cover.
The main reason why you may want to buy this kind of insurance is that it provides financial security for your family and provides life cover for you. What makes this a preferred type of life insurance is that the premiums you will be required to pay are much lower compared to permanent life insurance. This makes it a more affordable type of insurance. So, you get the peace of mind associated with life insurance without having to pay expensive premiums.
But when should you buy term insurance? Is there a right age? It is not possible to pin a number to this question. It is important to note that like other life insurance policies, people who buy term insurance at an early age pay less in premiums than those who buy the insurance at an advanced age. So, it is better to buy this kind of insurance while still young.
When you are young you are healthy and the chances of having health issues which may raise your premiums are low. When older and with health complications you may not even qualify for the cover in the first place. So, be safe and buy term insurance while still young.
Being young however is not the only consideration you should bear in mind. Have you just gotten married? Do you have a child? Do you have a college loan debt? If your answer to any of the above questions is yes then you need to buy term insurance. It will ensure that in case of premature death those you leave behind will not be left penniless or having to struggle with paying your debt. After all, you never know when death will strike. It is better safe than sorry. The best time to think of buying term insurance is as soon as you make a major milestone like marry, have kids, buy a house, buy a car and so on.
To get maximum benefits from a term insurance you purchase, choose a long term. Choosing a 10-year period at the age of 30 is just not sensible. The chances of being dead by then are quite slim so opt for longer periods. Another option is to choose an insurance plan that allows you to convert to a permanent insurance at the end of the tenure specified.