Till what age should I take my Term Plan?
Till what age should I opt for term plan - Till Active earning period (or) till the max. term allowed?
Simple
Answer - “Till the active
earning period”
Detailed
Answer:
Many of us prefer taking up a term plan till the maximum
permissible age (currently 85 years). Reason being, there is more probability
to die after 60+ years & hence the amount will surely be given to the
nominee & the premium paid is not going as a waste!
2) Till the liabilities are present – be it
physical liabilities in the form of loans or emotional liabilities in the form
of children getting settled.
Reasons to suggest this way are as below:
1) Premiums increase in term plans as the policy term increases:
# Premium till 60 years of age: 37,204/-
# Premium till 85 years of age: 92,365/-
Unfortunate Death till 60 years is going to result
in getting 1 crore only, but the premiums paid for that will be 5.50 lakhs
extra!!!
But the argument will be, the family doesn’t get anything in case of death 60 years!
Fine – read out the below reasons as well:
2) Value of 1 crore will also come down drastically as the policy term increases due to inflation
# Value of 1 crore at age 61 years: 29.40 lakhs
# Value of 1 crore at age 71 years: 16.42 lakhs
# Value of 1 crore at age 85 years: 7.26 lakhs
We will have to hope & pray that we either pass out before age 60 years (or) before 70 years at least as the amount received by the nominee will be at least reasonable.
3) Invest the difference premium as S.I.P in Mutual Funds
If you are prepared for paying a higher amount of
premium, then instead of increasing the policy term till 85 years, investing
the difference (55,161/- p.a.) in Mutual Funds @ 10% CAGR will provide benefits
as below:
# Value of investments at age 61 years: 27.59 lakhs
# Value of investments at age 71 years: 71.56 lakhs
# Value of investments at age 81 years: 2.71 crore
Now, how much would like to leave to the family?
And which option would you choose for that?
