Age for insurance cover. Need it for 100 years?
05-01-2018 Fri 14:51

It need not be said that everyone who is earning needs insurance cover. In this, many are confused because of the various options. Mostly, it is not known up to what age to take insurance cover. Depending on the need, life-time cover is available. In this connection, let us see experts suggest the age till when insurance can be taken.

Term policies
It is a policy that gives insurance cover for a period of time. After the term ends, no returns will be made under the policy. The policy requires less premium for more cover. Besides these, there are conventional insurance policies, which pay the policy holder, if he is alive even after the policy term has ended. These demand high premium, but less protection. Those policies among these which give lifelong cover, are being offered as whole life policies or permanent policies.
Whole life policy

Those who are less than 25 years can take an ordinary policy and when it ends, they can choose whole life policy. If they choose whole life policy at a young age, they need to pay high premium. There are various term plans. Not just insurance policies, but also those where you can take loans, secure your house, cover during bus, rail journeys, etc.
Egan Religare firm is offering Life iTerm policy. Normally life term policies are limited from 30 to 35 years. If premium is paid up to this age, the policy is alive. It closes after the policy term ends. But whole life policies last lifelong. Which means 100 years. Premium is paid for a limited period. For example, if a 30-year-old person takes a whole life policy, he can pay premium up till he is 60 years. Later, he need not pay any premium. But the policy is alive.
As per Egan Religare life term plan, a 30-year-old person pays premium for 30 years, that is until he is 60 years. Later, the policy will be transformed in to whole life plan. If the policy holder dies during the ordinary policy period, insurance cover is considered paid. After the payment of premium ends, whenever the policy holder dies, his family members or nominees will be paid the sum assured. Then the policy is closed. Which means, with the death of the policy holder, the policy ends.
Natural death occurs usually before the person turns 100. So people who want to leave some money for their heirs or those who wish not to burden their heirs with expenditure after their death, take whole life term policy.
Premium burden

It is a waste of money to take a whole life policy, with such a huge difference. But if the difference in premium for an ordinary policy and a whole life policy is 10 per cent or less, it might be considered. Instead of whole life term plan, an ordinary term plan can be taken. That is as per the above mentioned Religare policy, premium of Rs. 7,500 per month has to be paid, until the person is 60 years of age. In the remaining, he can invest in mutual funds which have low risk and leave a lumpsum for his heirs. In the above example, for whole policy, a premium of Rs. 40,000 has to be paid. Whereas for ordinary policy, it is enough to pay Rs. 7,500.

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