Till What Age Should I Take Term Insurance

What Should Be the Duration of a Term Insurance Plan?

Term insurance provides financial security for your loved ones in your absence. Choosing the right term duration is crucial to protect your family.

Written by : Rishabh Jain

Reviewed by : Lalit Lata

Lalit Lata

2023-02-07

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Choosing the right tenure for a term insurance plan you are planning to buy can often lead to confusion. If you decide on a shorter duration, the protection won't be enough for your financial needs. If you choose a prolonged period, you will pay more premiums than required. That is the reason it is essential to choose the right length of your term insurance policy, considering your financial needs.

A term insurance plan covers you for a certain period or 'term' of your life. If the policyholder passes away within the policy term, the death benefit is paid to the beneficiaries/nominees. Hence, choosing the right duration of your term insurance plan is a crucial factor for your family's financial protection.

Table of Content

What is the Term Insurance Age Limit?

To ensure best coverage, it is important to know till what age term insurance should be taken. Term insurance age limit typically range from 18 to 65 years old. However, it can vary depending on the insurance provider and the specific plan. Experts suggest that the best age for term insurance is while you are young. 

While some insurers offer coverage up to 70, getting a term life policy becomes more challenging as you age. Premiums also tend to rise significantly after a certain age. Therefore, it's generally recommended to purchase term insurance earlier in life for the most affordable rates and widest range of options.

What are the Different Term Insurance Age Limits?

There are two main types of term insurance age limits to consider:

  • Minimum Age Limit: The minimum Term Plan Age Limit is typically set at 18 years old. At this age, you're considered an adult and can enter into financial contracts like insurance policies.
  • Maximum Age Limit: This varies more widely between insurers and can range from 60 to 70 years old. Some insurers may even offer plans up to 85 for specific products like guaranteed issue life insurance. However, it becomes increasingly difficult to qualify for term insurance as you reach these upper limits.

How to Decide the Duration of Your Term Plan?

Generally, it is said to have the term plan active during your working years. So, it depends on the age at which you buy the plan. But is age the only factor that will help you decide the duration of your term plan?

Three other things to be considered while choosing the duration are - your financial goals, liabilities, and lifestyle habits.

Let us understand these factors in detail.

Financial Goals

In life, you will have various milestones to achieve. For example,

  • You get married
  • Plan for a kid
  • Save for the higher education of your kid
  • Create a corpus for your retirement

You need to think about the financial protection of your loved ones on each of these milestones. With a term plan, if something happens to you, the death benefit will help your family cope with the financial loss.

Liabilities

The term insurance cover should pay for any liabilities that you have. For example, if you have a home loan. You pass away without repaying it. A term plan will help in repaying the remaining unpaid amount. It will take off the financial burden your family may have to bear in your absence.

Learn - how to protect your home loan with a term plan.

Lifestyle Habits

If you have any lifestyle habits such as consumption of tobacco or alcohol - then you must rethink the duration of your term plan. Such practices may lead to a higher susceptibility to critical illnesses. Treatment of these illnesses is expensive and may cost people their lives. A term plan with critical illness cover may help to manage the cost of such treatment.

Did you know?

According to a study by the Life Insurance Corporation of India (LIC), term life insurance is one of the most popular types of life insurance purchased by Indians.

Claim Settlement Ratio

What is the Ideal Duration of a Term Plan? 

Most life insurance companies offer coverage for up to 75-85 years of age, while some may offer coverage till the age of 99. It varies from insurer to insurer. Evaluating the correct duration of a term insurance plan is critical. You need to plan about the finances if something happens to you. Let us understand what happens when you buy a term plan at different ages:

  • If you are in your 20s:  Buying term insurance depends on your current age and retirement plans. Let's say you are in your 20s and are likely to retire by the age of 60. You must go for a 35-40-year term plan. It will get you covered until your desired retirement age.

It is good to think and plan for your future. If you buy a term plan at this age, the premium will be low. It will be affordable for you. Hence, it is always said to buy a term insurance plan as soon as you start working.

Understand the reason you should buy a term plan early.

  • In your 30s and 40s: When you enter your 30s or 40s, you will likely get married and start your family. Now that you have people who are dependent on you, you should start thinking about buying term insurance plans.

At this age, you should opt for a duration of 35-40-year term insurance, depending on your financial needs and retirement plans or employment type.

  • In your 50s and 60s: When you are older, around 50-60 years of age, by this time, your children will likely be settled, and the burden on you to work and pay bills will be low. At this age, you can opt for a term plan for a 15-year term.

Read to know if you should buy a term insurance plan in your 50s.

The premiums you will pay in a term plan will remain the same throughout the policy tenure. However, remember that the premium amount depends on a wide range of factors, such as age, gender, lifestyle habits, occupation, etc.

Take your retirement age into consideration while deciding on the term cover. Ask yourself questions like how long your family members will be dependent on you financially and when the liabilities you have are over. Such questions will help you gauge the right answer.

Final Words

Choosing the right term insurance duration is crucial for securing your loved one's financial future. Ideally, your coverage should end when your dependents are financially independent, typically between 55 and 65 years old. Consider your financial goals, liabilities, and lifestyle habits when determining the optimal term length. Remember, purchasing a term plan early in life allows you to lock in lower premiums and provides valuable coverage throughout your working years. Consult a financial advisor to create a personalised plan that aligns with your specific needs and life stage.

Glossary

  • Term Insurance: A life insurance policy that covers a specific period (term) of your life. If the policyholder passes away within the policy term, a death benefit is paid to the beneficiaries.
  • Death Benefit: The amount of money paid by the insurance company to the beneficiaries upon the policyholder's death.
  • Critical Illnesses: A critical illness is a life-threatening health condition that requires significant medical intervention and carries a high risk of death if left untreated.
  • Liabilities: Your financial obligations, such as outstanding debts like a home loan.
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FAQs Term Insurance Plan Duration

Ideally, your term insurance coverage should end when your financial dependents no longer rely on you. This could be when your children are financially independent, or you've paid off your debts like a home loan. Typically, this falls between 55 and 65 years old.

No, term plans typically don't offer renewal options after the policy term ends. However, you can explore buying a new term plan if you're still within the eligible age bracket (usually up to 65 years old).

No, most standard term plans don't allow changing the duration after purchase. However, some insurers might offer convertible term plans where you can convert your term plan to a whole life insurance policy with a longer duration, but typically at a higher premium.

Your age significantly impacts term duration. Generally, younger individuals (20s-30s) can opt for longer terms (30-40 years) to cover their working years and family needs. As you age (50s-60s), shorter terms (10-15 years) might suffice, depending on your financial goals.

Yes, it can be beneficial. A term plan ending around your retirement age ensures your family has financial support even if you pass away during retirement when they might still have financial needs.

The main risk is that your family might be left without financial support if you pass away after the short-term ends. Unexpected life events can impact your financial dependents even after you think they're independent. Consider a longer term for added security.