The 40s is a period in your life when you are likely to be well settled in your career after years of putting in a significant amount of hard work. You are likely to be married with kids in school or those who are about to complete their education. Your financial responsibilities are at their peak and you must be in the process of developing a plan to meet these goals and requirements.
Along with a burgeoning amount of financial goals to meet, your financial liabilities would also be on the rise. You may have taken out a mortgage to pay for your dream home, or you might be in the process of opting for a student loan on behalf of your ambitious child.
As you juggle this set of financial responsibilities and liabilities, the need for term insurance becomes even more pronounced. In the event of your absence, your family would be left financially vulnerable and would struggle to meet these responsibilities and to repay your liabilities. This is where term insurance comes in. Upon your unfortunate demise, term insurance doles out a sum of money to help your family maintain their standard of living, meet future goals and pay off liabilities.
However, if you still haven’t bought term insurance, it could put your family in a financially compromising position should something happen to you. Here are a few things you need to need to know about purchasing term insurance in your 40s:
1.It is not too late to buy term insurance: It is true that the earlier you purchase insurance, the cheaper the premiums you end up paying. With an increase in age, there comes an increase in the risk of mortality and thus, a hike in premium rates. However, term insurance has the benefit of being the most affordable of all forms of life insurance. So, even if you opt for a term plan in your 40s, the rates for your policy will likely remain affordable.
2.Keep yourself healthy: In order to take advantage of the lowest possible term insurance rates, it is important that you keep yourself physically healthy by being health conscious and avoid indulging in excessive drinking and smoking. In doing so, you can avail of term insurance in your 40s at an inexpensive rate and get assured financial protection for your loved ones.
3.You need to be adequately insured against debt: Be it your mortgage, car/two-wheeler loan or your credit card debt, it is important to ensure your term insurance payout adequately takes care of repayment of such liabilities. Interest rates for loans and delayed outstanding credit card debt might become a burden on your family in your absence. You should calculate the cost of paying off these liabilities and accordingly opt for a term plan.
4.Opt for decreasing coverage: If you have a high amount of liabilities in your 40s, that are likely to decrease over the course of time, you can opt for decreasing coverage. As you end up paying off debt, you no longer need a high sum assured to take care of debt repayments in your absence. With decreasing term insurance, your coverage decreases (usually by a fixed amount) every year. This, in turn, makes term insurance more cost-effective for you and your family.
5.Use term insurance as a savings device: As you near the 60s, retirement planning becomes a hot topic. Your investment needs transition from short-term to long-term, as you plan ahead for a serene retired life. Your term insurance, too, can come in handy, in this case. While term insurance is generally thought of as a pure insurance instrument, modern-day term plans are integrating savings components within the existing framework to help consumers derive maximum benefit. With the ‘return of premiums’ feature, upon maturity of your term insurance policy, if you have not made claims against the policy, the premiums paid towards the policy are returned to you, in full. Thus, term insurance can also work as a savings device for those in their 40s and help you save for a leisurely retirement.
A term plan is within your reach even in your 40s. You can still purchase a comprehensive term plan at nominal rates. In fact, purchasing a term plan online can cost you less and provide adequate cover at reasonable rates. The iSelect Star online term plan from Canara HSBC Oriental Bank of Commerce provides a choice of coverage (level, decreasing or increasing), and different premium payment options to help you customize your policy as per your needs. You can opt for whole life cover or less as well as enhanced coverage with protection for accidents and disability.
Utilize the financial freedom available to you in your 40s and take the steps necessary to provide your family with a financially safe and secure life ahead.