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When to buy a term insurance policy?

dateKnowledge Centre Team dateApril 16, 2021 views231 Views
When to buy a term insurance policy?

If the only bread-earner of the family passes away suddenly, the family may undergo some notable financial shock. The monetary savings that the family owns might not be completely sufficient to meet all their financial obligations. Hence, to avoid all these situations, financially responsible people plan for the secured future of their family in advance and buy term life insurance at an early age.

What is the right age to buy term insurance policies in India?

What is the right age to buy a term life insurance policy? This is the most commonly asked question people ask before buying a term plan. Many people are not aware of the benefits of buying a term insurance plan at an early age and feel that the late 30s is the most suitable age to get a term life insurance plan. However, this is just a misconception, and it is always suggested by veteran financial advisors that one must buy term plans at an early age.

Although it is a known fact that not every person holds the same income, therefore, many people might not hold enough funds to buy a term plan when they start earning. Keeping this thing in mind, mentioned below are the different age stages at which people can buy the best term plan online.

In the early 20s

The early 20s is the most suitable age when a person can buy a term life insurance plan. This is the age when many people graduate from colleges and start earning. Purchasing term insurance at this age will secure the future of the policyholder along with inculcating good saving habits in them.

Also, in the present times, many individuals get married in their late 20s or early 30s, and hence they do not have any additional financial burden on their shoulder. They can easily keep aside a small portion of their income to pay for the premiums. Remember, the earlier you buy a term plan, the smaller will be the premiums. There are a lot of reasons due to which you may end up paying more premium when you buy a term life insurance.

Read more on reasons you might be paying a higher premium.

In the late 20s or early 30s

The late 20s or early 30s is usually the time when people get married and enter into the new phase of their lives. Hence, to secure the future of their spouse along with their kids, this is the most suitable time to purchase a term life insurance policy.

As people have just started their married life, there are no kids, and the expenses are also less. At this point, people can easily draw out funds for these term plans, and they can also receive various tax benefits under section 80C of the Income Tax Act, 1961.

Why is it better to buy term life insurance at an early age?

A term life insurance policy is basically a protection plan that individuals take upon their own life. This plan assures monetary security to the family of the policyholder in case the person holding the policy passes away.

Getting a term life insurance plan at an early age can be extremely beneficial due to many reasons. The main reason why people prefer receiving these term plans at an early age is because of the low monthly premiums.

For example, if a person takes up a term life insurance plan at the age of 20 or 25, then they are required to pay small premium when compared with the people taking these term plans at a later stage in their life.

Read more on the advantages of buying a life insurance plan at an early age.

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How long should you hold term life insurance?

When purchasing a term life insurance policy, it is advisable that you must always check the duration of these plans. It is always better to get a term insurance policy for a longer duration rather than the short term ones as the long-term plans are bound to safeguard you and your loved ones till the time of your retirement.

As 60 to 65 is the normal retirement age in our country, you can set these numbers as the benchmark age and look for plans that provide coverage for a longer duration.

How term plan from Canara HSBC Oriental Bank of Commerce Life Insurance can help you?

In the present times, there are a lot of banks and private financial institutions that provide term life insurance plans. There is a wide range of factors that impact life insurance premiums. Hence, it is always advised that people must analyse all the factors like their age, income, expenses, plan coverage, debts and liabilities before buying a term life insurance.

Term life insurance plans from Canara HSBC Oriental Bank of Commerce Life Insurance is available online. iSelect Star Term Plan offers complete coverage to people till the age of 99. Apart from this, the plan also renders some additional benefits like:

  • Return of premium alternative when the policyholder outlives the maturity date of the term life insurance policy. That means all the premiums that you have paid throughout the tenure will be paid back, if you outlive the policy.
  • Increasing sum assured on the term life insurance policy taken by the policyholder. You can choose to increase the sum assured as per your evolving needs.
  • Apart from securing the life of the policyholder, iSelect Star Term Plan also has the option to cover your spouse in the same policy.
  • For people who are not comfortable in paying a huge amount, this term plan has an option for limited premium payment.

It is always advisable that you take term insurance plans at an early age so that you can protect yourself and your loved ones at more modest amounts of monthly, yearly, or quarterly premiums. In addition to this, you must also evaluate the necessities and requirements of your family and weigh which policy can provide them with the maximum benefit.

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Frequently Asked Questions (FAQs) for Term Insurance

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to Ask while Buying a Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
  9. 9. Does the term insurance plan have a cash value if you decide to cancel the policy?
  10. 10. Under what circumstances can a term insurance plan be cancelled?
  11. 11. Can I pay the premiums online or make electronic payments?
  12. 12. What will happen to the term plan if the life assured starts smoking after purchasing the policy?
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