In fact, if you buy term insurance at a later stage, it may not be a good idea. It can be a better idea to create a legacy through investments than to pay high premiums
It has been established beyond doubt that term insurance is the best way to get life insurance. When you buy term insurance, your premium just goes towards life protection, and it does not have any insurance component. For a reasonable premium, you can get decent coverage.
Decide On An Appropriate Tenure
In fact, if you have no dependents or liabilities, it does not make sense to buy a term insurance policy. Also, how long your term insurance tenure is will depend on how long you have responsibilities. Let us say you are set to achieve complete financial independence at 60, you ideally do not need any term insurance post that. So, ideally, you need term insurance only during your earning life.
Of course, it is not that simple. You may have unpaid loans. Or, you or your spouse may have unpaid monetary needs till you are 70; in that case, you would term insurance till then. So, if you have a home loan till you are 65 years old, it is essential to be covered.
One may feel that term insurance is a way to one can leave behind a legacy. In fact, if you buy term insurance at a later stage, it may not be a good idea. It can be a better idea to create a legacy through investments than to pay high premiums.
Buy At An Early Age
In fact, one should buy term insurance at an early age, as soon as one has an income or dependents. Premiums increase sharply with age as one is more likely to be diagnosed with chronic conditions such as hypertension and diabetes as one grows older. Also, if you have undergone any procedure, an insurer may reject your term insurance application.
Also, unlike health insurance premiums, life insurance premiums get locked for life and do not increase with age. So, it is best to lock in the premium at an early age.
So, if you are healthy, you can get a reasonable premium for your term insurance.
Do not fall for sales pitches that may push you to buy term insurance with return on premium or a double return on premium. Another common mistake to make is to fall for an agent's pitch and buy a Unit Linked Insurance Policy for the promise of market-linked returns. Experts suggest that one should never mix insurance and investment.
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