Decoding The Right Time To Buy Term Life Insurance

India is growing rapidly, and so are Indians’ financial aspirations, reflected rightly in the growth of investments across financial tools like FD, mutual funds and stock markets. However, the rate of adoption of life insurance is much lower at approximately 3%.

While most of us have heard of term life insurance, we hesitate when buying an insurance policy. The reasons for this could be :

1. The lack of awareness about when and how to buy a right term life policy
2. Considering insurance as an expense
3. Long-term commitment and higher premium amount

The hesitation to buy insurance often delays acquiring a term plan. But if you ask us, “When is the right time to buy a term plan ?” – it is “as early as possible”. By purchasing early, you not only save on the premium but most importantly ensure the financial security of your family from the earliest before your responsibility grows so much so that your list of financial commitments binds you to stay without this cover.

Let’s imagine three scenarios :

First, there is Rohan, a 23-year-old professional just starting his career. For him, securing term insurance is a breeze and very affordable. Purchasing insurance now can help him secure his future. 

Next is Priya, a 33-year-old recently married working woman. When she thinks about insurance, it’s about protecting her newly formed family and planning for future finances. Her premium would be slightly higher than Rohan’s due to her age. 

Lastly, we have Kishore, a 40-year-old dedicated professional juggling work and a household with kids. For Kishore, premiums are higher due to his age, and he also has to plan for increased financial responsibilities. With suitable riders like critical illness or disability add-ons, he can have effective term insurance to ensure his family’s stability. 

While affordability and circumstances are different in each of these cases, they have one common fact – it’s never too late to buy life insurance. 

Common Misconceptions  

When it comes to term life insurance plans, misconceptions are many and widespread. 

1. Firstly, there’s a common belief that you don’t need life insurance if you’re young and healthy. However, this is far from the truth. Buying life insurance when you’re young and in good health is a smart move. It makes insurance more affordable and provides more value for your money. 
2. Another widespread misconception is that life insurance is prohibitively expensive. While it’s true that factors like your age, health, and the type of policy you choose can affect the cost, there are plenty of affordable options. Term life insurance, in particular, is a very cost-effective choice.
3. Many also mistakenly believe life insurance is only necessary if you have dependants. Due to this, many wait until their marriage or until they have kids to buy insurance. When it comes to benefitting from your insurance’s full range of features, waiting until you are in your 30s can be a mistake.
4. Last but not least, people think they are investing in mutual funds and other investment tools that can provide financial security to their families. But, you must understand that investing in such tools is only possible if you stay invested in those that long for the corpus to build. But when it comes to an unfortunate, untimely demise, do you have plans for the dependents ? This is why it is essential to maintain a balance between investment and insurance in your financial planning as early as possible.

Best Time To Buy A Term Plan

When considering a term plan, starting early, ideally in your early 20s, is the best approach. At this stage, you’re probably starting your career path and establishing financial independence. This makes it the best time to think about long-term financial security. 

Affordability is one of the biggest perks of buying a term life plan at a young age. Premiums are lower when you’re younger and healthier. This means you can secure a higher term plan cover amount at a cost that won’t strain your finances. Additionally, getting a policy approved is easier when you are in good health. 

Is It Too Late To Buy A Term Plan?

If you’re in your 30s or 40s and wondering if it’s too late to buy a term life plan, the answer is a reassuring no. This stage of life is still a viable time to invest in term insurance. While premiums are generally higher than they would have been in your 20s, the benefits of securing a term plan at this age can be substantial. 

One key aspect of this is to focus on adding riders. In your 30s and 40s, your financial responsibilities will likely be more complex. Here, riders such as critical illness coverage or disability riders can add an extra layer of protection. Another essential aspect to consider is integrating your term plan with your retirement planning. You can also consider factors such as inheritance planning, changing health conditions, tax benefits, etc. 

Key Takeaways

In short, the younger you are when you buy a term life insurance plan, the more you will benefit from it. Early term life insurance purchases are more cost-effective. However, if you are in your 30s and 40s, you are still not too late, especially if you pick the proper term life plan with a good combination of riders. Consider platforms like PhonePe for a seamless and hassle-free insurance comparison and purchase experience.