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What Is the Best Time to Buy Term Insurance?

A term plan is the most go-to life insurance product which adds substantial stability to your overall financial portfolio. These policies suit all age groups because of their affordability and simple eligibility criteria. However, in buying a month or the applicant’s entry age, we can generally agree on the best time to buy life insurance.

When Is the Best Time to Buy Term Life Insurance?

Most Indians purchase term policies in a rush during the last three months of a financial year. In March, insurers' agents and online portals face the most traffic as people want to avail of associated tax benefits.

It is wise to avoid these last three months as a hurried buying decision will attract greater chances of committing mistakes. People must give adequate time to market research and stick to plans that offer effective riders.

Also, the agents remain busy handling more consumers between January and March. Consequently, they cannot dedicate enough time to explain the particulars of a plan to a potential consumer. Therefore, April is the best time to buy a term plan when almost all the insurance companies have left behind more than half of their annual workload.

Why Is It Never Too Late to Buy a Term Plan?

Due to the high affordability of premiums, it is always advisable to purchase term policies while young. However, the associated benefits meet the financial demands of the end beneficiaries regardless of the policyholder’s age. Hence we have discussed the applicability of term life insurance for:

Senior Citizens and People About to Retire

Though buying a term insurance policy so late in life is not recommended, a person who previously failed to allocate a separate budget for life insurance should definitely buy one as soon as their child starts earning. It is a crucial step towards consolidating post-retirement financial stability or adding a protection layer to your spouse in case you meet an unfortunate event.

Married Couples Planning for Children

Many consider this phase of life the best time to buy life insurance as individuals are at their peak income potential. Moreover, getting a term plan with life coverage close to 10 times the annual income ensures the child and spouse experience no financial distress, even if they need to confront a medical emergency.

Working Professionals in Their Early 20s

Financial advisors suggest these individuals purchase life insurance early as they start contributing to their family's income. At the beginning of their career, the average salary is also low; thus, it is considered the appropriate age to plan for future financial security. On top of everything, you get to reduce taxable income.

Why Is Term Insurance an Important Part of Your Life?

These are several common reasons that necessitate owning a term plan:

Family members become the beneficiary of death benefits if the policyholder meets an unfortunate demise within the policy term. This guaranteed money secures the future of your loved ones and ensures all liabilities are paid off.
Some term plans offer maturity benefits to the policy buyers provided they have paid timely premiums.
Add-on facilities provide extra protection to the policyholder's family when coupled with term plans. For example, if you add riders like an accidental, critical illness, or disability cover, the insurer will pay the dependents as per the laid-out conditions.

If you have chosen accidental benefits apart from basic life coverage, your family gets the insured sum in case of your unfortunate demise in an accident.

Section 80C of the Income Tax Act (1961) permits tax exemption on income up to ₹ 1.5 Lakhs if it is utilised as a premium payment for a term plan. Moreover, the total sum assured to the beneficiaries in death benefits is entirely tax-free as per section 10(D) of the Income Tax Act.
Some insurance companies offer rider options where the validity of the term plan stays intact even if you miss some premium payments owing to loss of work.

So, these are some of the well-established arguments favour buying a term life insurance plan in India.

Are you still wondering when the best time to buy life insurance is? Financial experts advise buying one term plan at a young age as soon as one starts earning. Two primary reasons behind this are you need to pay remarkably low premiums to ensure substantial life coverage. Moreover, it generates a sense of financial discipline from the early stages of your investment journey.

FAQs about the Best Time to Buy Term Insurance

Can I hold multiple term insurance plans?

Yes, any Indian citizen can possess more than one insurance policy from the same insurer or different companies. People generally purchase multiple term plans to reduce the risk of a claim rejection and benefit from additional riders.

What is the maximum age limit of term insurance?

As medical science continues to advance, human life expectancy has also improved from earlier. Consequently, life insurance providers have elevated the upper age limit for term plans. People over 60 years of age can also now opt for buying specialised term plans for senior citizens. Many insurers provide life coverage to individuals until they reach 70-75 years of age.

When should you add an accidental cover on top of basic life coverage?

Suppose you must travel a lot by road, rail or airway for work purposes. Chances are significant that there can be an unfortunate event during a trip. Thus you may opt for an additional accidental cover to ensure your family gets extra protection by adding a little extra to the base premium.