What’s an ideal policy duration?
Remember. With a term insurance product, you keep paying your premiums until you die. Or the policy lapses. So there is an expiration date of sorts and it’s on you to decide how long you want to keep your policy. And you have to make this choice at the time of purchase. You can’t change it afterwards. So there’s a lot riding on this.
Once again, you are looking to replace yourself financially. But you are only doing it because — When you’re young, your family won’t have a lot of savings to fall back on. As you grow older, however, that changes. For instance, by 60, your kids will be all grown up. Your spouse will likely have a retirement fund to lean on and you won’t have many dependents to worry about.
So 60 could be a good place to start. But the insurance company knows something. The average life expectancy in India is about 70. So if you are intending to keep the policy beyond 70, know that your premiums will shoot up. Like a lot. And that means the sweet spot is somewhere between 60 and 70. Any number in that range should ideally serve you well.
And while this overview should help you understand term insurance, there are a few add-ons aka riders you can attach alongside the base policy to make sure your financial replacement is as robust as you. And the most useful rider of them all is a life stage benefit.