Is a lengthy term-life insurance policy worth it?
Published by Morningstar
Abhishek Kumar's role: Wrote this article
Abhishek Kumar of SahajMoney answered whether a long term-life policy is worth buying, using the example of a 25-year-old who plans to retire at 65 and compares cover to age 100 with cover to 65.
What Abhishek Kumar said
How long should my term-life cover run — until I retire, or for life?
I would size the tenure to the years in which someone actually depends on my income. A young professional planning to retire at 65 needs the cover to run until then; after that, the family is meant to live off the retirement corpus built during the working years, not off a payout. So a policy that runs to age 100 is protecting an income that, by design, no longer exists.
Is paying extra for a term plan that covers me to age 100 worth it?
In the comparison I ran for a 25-year-old non-smoker, cover to 100 cost noticeably more each year than cover to 65. If that premium gap were instead invested in equity through the working years and then left to compound in debt after retirement, the money built over those decades is what the extra cover should be weighed against, and for many people that comparison tilts towards the shorter policy. I did leave the Section 80C deduction on premiums out of the arithmetic to keep it simple, so treat it as a rough comparison rather than a precise one.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on insurance
The piece weighs a term life policy running to age 100 against one ending at 65 for a 25-year-old non-smoker. It compares annual premiums of ₹7,250 and ₹4,007 and looks at what investing the ₹3,243 difference might add up to, setting aside the Section 80C tax benefit for simplicity.
Publisher source
Is a lengthy term-life insurance policy worth it?
