Rakesh had purchased a Life Insurance policy for himself in his early 30’s. The term of the insurance plan was 20 years, with his wife as the nominee.
Rakesh was of the opinion that he need not be covered beyond his age of retirement which he thought would be around 55. So he opted for a term insurance that would cover him up to the age of 50. But unfortunately, Rakesh met with his demise owing to a severe heart attack at the age of 61. His term life cover had already expired by then and this meant that it couldn’t provide any benefits to the nominee chosen by him. While Rakesh, having only a daughter, had fulfilled all his responsibilities towards her, his wife was left dependent on others to meet her financial needs like medical expenses, house maintenance etc.
How many of us still think like Rakesh? Was there any point sacrificing the future benefit of a longer life cover just to save some money on premiums?
This is generally what happens with people. To reduce the burden of paying premium for a longer term, they sacrifice the future benefit of a longer life cover. Obviously, you can never know when or what destiny has in store for you. Also, it is very true that life and death are not in your control. But what is in your control is that when fate blows out the light of your life, at least your family members, especially your spouse, are not left in darkness. In the case of Rakesh, at least his responsibility towards his daughter was fulfilled. However, you when an unfortunate event can occur. Hence, it’s better to be secured for a longer tenure. Buying a term plan with a shorter cover defeats the very purpose of buying term life insurance.
Term life insurance provides pure protection to your dear ones’. This form of insurance takes care of your financial responsibilities in case an unfortunate event of death occurs to the bread winner. In other words, in the event of the life assured meeting with an untimely death any time during the term of the policy, the nominee will be paid the entire sum assured. If the Life assured survives till the end of policy term, there is no maturity benefit that he can avail of. So the sole purpose of a term insurance plan is financial security for your dependents. Hence, it becomes imperative that you see to it that the policy term is longer.
Let’s understand this with an example. If you are 30 and take a term plan for 20 years of age, it’ll end when you reach 50 years of age. If you survive till then, buying a new plan will be very costly and difficult due to health issues. But instead of 20 years, if you buy a policy with a life cover up to age 80, you can have the advantage of a longer cover by paying a lesser premium because you are younger right now and insurance premiums are directly linked to the age of the policyholder.
Opt for life insurance to cover you up to age 80
Hence, a long life with longer insurance cover is always better than a long life with shorter insurance cover. Opt for life insurance to cover you up to age 80 so that even in case you live long, you are securing the financial ability of your family, especially your spouse.