Buying a Rs 2Cr term plan. Should I opt for coverage till age 60 or age 100?

Question

I am 35, earning about Rs 18L/yr and looking to buy a Rs 2Cr term insurance.

The agents are heavily pushing the cover till 100 option saying my family will definitely get the payout eventually.

It costs more in premiums but seems like a guaranteed return of the sum assured.

Does it make sense to pay extra for the whole life cover?

Mohan Gupta · Accepted Answer

Buying term insurance that covers you until age 80 or 100 is a common trap and simply does not make sense. The entire purpose of term insurance is to protect your dependents during your most vulnerable years. Maximum coverage is required when you have maximum liability, which is typically between the ages of 30 and 45 or up to 50. This is the phase when your home loans are active, your children's education is pending and your parents might become financially dependent on you. Once you are in your late 50s or early 60s your financial situation looks completely different. By then your kids are usually settled, your home loan is paid off and you have built up your own assets. You should actually reduce your cover or let go of it entirely at that stage. Instead of paying higher premiums for a cover till 100 you should focus those extra funds on your retirement savings. A good rule of thumb is to max out your cover to about 10 to 15 times your annual income but only for the years you actually need it. Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

Buying a Rs 2Cr term plan. Should I opt for coverage till age 60 or age 100?

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