Apart from the size of the life insurance policy, there is one more critical aspect that one needs to consider when buying a life policy, i.e., the tenure of the policy. Nowadays, several life insurance companies offer term insurance products with a tenure of up to 85 to 100 years. However, insurance buyers often find it difficult to ascertain how long the insurance cover should be. Having life insurance for a shorter than required period can expose your dependents to financial risks, but having a life policy for much longer than the necessary tenure, too, can have serious financial repercussions.

So, do you need a life insurance cover for a long period? Let’s find out.

A Longer Tenure Policy Means The Need To Pay More Premium

The longer the tenure of the term plan, the greater will be the premium on the policy. Some factors that impact the life insurance policy premium include the age of insured when buying a policy, the health condition of the insured, features and tenure of the policy, etc. So, when you buy a life policy for a very long tenure accordingly you have to pay a much higher premium every year till the end of the policy tenure.

Instead, you can determine the appropriate tenure for your term policy plan and invest the premium thus saved towards building a bigger retirement corpus.

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Why Do Some People Want A Life Cover For A Very Long Period?

Fear of outliving the life insurance tenure compels people towards getting a term plan for a very long tenure. It’s important to understand that when you outlive the insurance tenure at that time you will accomplish most of your financial goals and there won’t be any unfinished financial responsibility left for you. Instead of depending on life insurance, you can create a bigger retirement corpus so that it can help you live a better retirement life and after your demise, it can help in the financial well-being of your spouse or a dependent family member.

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Things To Keep In Mind When Choosing The Tenure For Your Life Policy

Normally, life insurance is required to ensure the financial security of dependent family members against the risk of early death of the bread-earning members. When you are the sole bread earner in your family and there are several financial obligations to fulfil, at that time life insurance provides relief towards the financial security of your loved ones. So, people ideally need a life policy till the age when their children are settled and they complete financial obligations such as repayment of loans and accomplish sufficient corpus for their retirement.

However, you may consider a life insurance policy for a longer period in special situations such as, if you are not sure that you’’ be able to build a sufficient retirement corpus or when you have big loan obligations for a long tenure such as a home loan. Remember, you have to choose your life insurance policy tenure at the time of buying it, you can’t change the tenure later. So, make sure you assess your insurance needs carefully before you buy a life insurance plan.

The author is an independent financial journalist.