Confused about the entry age requirements for term insurance? Learn what it is and how it can affect your coverage options and premiums.
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Term Insurance (TI) can be understood as an agreement between the insurance company and the policyholder that provides financial coverage to the insured for a specified period, i.e., a specified term (for example, 10, 20, or 30 years). If the policyholder faces an untimely death during the specified term, the insurance company will pay a death benefit according to the policy terms. Term Insurance policies are often referred to as the purest form of life insurance plans and have some age limits.
The entry age for Term Insurance plans is 18 years, as the age limit to get Term Insurance generally ranges from 18 to 65 years.
It is a misconception that you cannot have Term Insurance after 65 years of age. For example, if a person buys a Term Plan of 30 years at the age of 65, this will act as a life cover plan for him because it will be valid till he is 95 years old. This misconception existed because earlier it was difficult for senior citizens (people who are above 60 years of age) to buy a Term Plan.
However, it is important to note that the term benefits, coverage, and premium differ according to the age of the insurer at the time of buying. This is because of financial goals and benefit requirements from the policy change with age.
Different insurance companies offer different types of Term Insurance plans. Insurers first calculate your premium based on factors, including the term you select, your age, overall health, and life expectancy. Hence, a medical history report will be required while buying a Term insurance plan. Here, the premium and the time period are usually fixed. In case of an unfortunate event during the insured term, a death benefit is paid to the beneficiaries.
There are options to renew your term insurance or extend the period, but the premium you have to pay will majorly change depending on your age at the time of renewal. Therefore, renewal premiums are generally higher. Moreover, many Term insurance plans are convertible, i.e., they can be converted to Permanent Life Policy plans.
It is better to invest in Term Insurance at an early age as the premium increases with your age. This is because with increasing age, your life expectancy reduces and you might suffer from some common medical conditions like thyroid and diabetes. This makes it difficult to get a Term insurance plan as you grow older. For example, the premium of a Term Insurance plan for Arun, who is 29 years old, is Rs. 899 per month, but for his brother Tarun, who is 39 years old, it is Rs. 1,899.
As discussed above, you can buy a Term Plan anytime between 18 and 65 years of age. However, it is believed that it is best to invest in it at an early age, i.e., in your 20s. Investing at an early age comes with the following benefits.
The insurance companies consider people in their 20s as low-risk candidates because the probability of them getting sick at this age is very low. This is the reason that premiums for Term Insurance Plans increase with age.
The benefits for people investing at an early age are more compared to people investing in their 50s or 60s. Hence, it is best to invest in a Term Insurance Policy at an early age to secure the financial needs of your loved ones.
Most insurance companies have started tele-medical services, which means that online consultations can now be used for health checks for people across ages who hold a policy.
A rider is a provision of an insurance policy through which you can add benefits to your existing plan. By adding riders, you can increase the coverage of your Insurance plan. For example by adding a rider in your Term Insurance, you can get coverage for your pre-existing health conditions. People of all ages can buy riders depending upon the applicable terms.
There are 8 cases of death that are not covered by Term Insurance.
The case of murder. The claim is not settled if the insurer was murdered by the nominee or if the insurer was murdered due to his involvement in some criminal activity.
Death cases that occurred under the influence of alcohol are not covered.
When death is caused by extensive smoking. Smoking increases health risks and is a common cause of death, hence it is essential to disclose your smoking habit at the time of buying the policy. If you do not disclose this habit and it is later revealed that death was caused by extensive smoking, the insurance company will simply decline the claim.
When a death occurs while participating in adventurous or hazardous activities, such as parachuting, hiking, paragliding, etc.
Deaths caused by pre-existing health conditions. For this, you can add a rider to your plan that covers pre-existing illnesses.
Unfortunately, deaths due to childbirth are not covered under Term Insurance plans.
Suicidal deaths are not covered by insurance companies in Term Plans.
A nominee is a person who will receive the death benefit in the event of the untimely death of the insurer. You can designate your spouse, children, or parents as nominees. You have to fill in nominee details at the time of registration. You can also change the nominee during your policy term. Make sure to fill in the correct details of the nominee. Usually, there’s no age limit; however, it’s best to confirm the same by going through the applicable policy wordings.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.