Tenure for a Term Insurance Cover

Many of us have heard a lot about term insurance cover these days, still for those who don’t know let me explain in two lines about it.

Term Insurance is a pure risk transfer policy where a person pays a premium for a particular risk cover amount (sum assured) regularly for a decided tenure, At the end of tenure the life insured gets nothing but in case of his death during the tenure – Sum Assured is paid to his nominee.

Now, from here on we all are clear about the concept of term insurance. But this is not what we are going to learn about in this post.

The question that comes to our mind is, What should be the tenure for a term insurance cover?

My Interaction With My Blog Reader

So, let me share a story of Abhi whom I interacted yesterday morning on zoom call.

Abhi is a salaried employee with an MNC and he was looking for a term insurance cover and this was his question that how much tenure he should opt for?

Well, here is a sneak peek of our interaction, and the advice I gave him, is the general advice I have for all salaried people (except the exceptions).

I asked him, “Abhi, how many kids do you have?” He replied, “2 kids – one son and one daughter.”

So, do you have plans for their education, marriage as well as you & your wife’s retirement? – to which he obviously replied YES.

I recommend you a tenure up to the age of 60 years or the age you expect & feel confident about when your financial responsibilities towards your children and spouse will be fulfilled.

Next thing is, you should opt for the Regular Premium Paying Option instead of the Limited Pay Option.

Now, Why Regular Pay? Because there could be a possibility that Abhi may achieve the financial corpus required for the above-mentioned goals much before the pre-decided tenure. So, if that is the case he can voluntarily opt-out of his term insurance by not paying the future premiums.

Because once you have the desired corpus that will fulfill your financial responsibilities than you don’t need term insurance cover.

You need a term insurance cover only until you have achieved the desired corpus amount. Unfortunately, if something happens to you before you have achieved the corpus then the Sum Assured which will be paid to the nominee will help them to fulfill their dreams as the way you planned.

This is the ideal advice to help those who are not sure about tenure, you can have your own reasons to decide the tenure of term insurance cover.

* * *

If you like this post, please do share it with others, and also Subscribe to my weekly newsletter below.