Why Is Buying A Term Plan Even At 40 A Great Idea?

Purchasing a term insurance plan in your 40s can indeed be a wise decision. At this stage of life, you are likely to have more financial responsibilities, such as children nearing the end of school and heading to college and the rest of the family relying on your steady income.

A term insurance plan can provide a financial backup to your loved ones in case something unexpected happens to you. If you have reached your 40s without term insurance in place, now is an opportune moment to consider this crucial step.

Find out how buying a term plan, even at 40, is a great idea.

Irrespective of age, the primary reason to purchase term insurance is to ensure your family's financial security. A term insurance plan offers your loved ones invaluable financial support in the event of your untimely demise.

At 40, if you are the primary breadwinner, the weight of responsibility for your family's financial needs falls on your shoulders. Therefore, it becomes not just advisable but essential to take proactive steps to protect them by investing in a term insurance policy.

Buying your own term insurance plan is highly recommended, even if you have an employer-provided life insurance plan. Once you quit or retire, you typically lose coverage under employer plans. However, your personal term plan remains intact regardless of your employment. It offers continuous coverage that extends beyond your working years, with some policies allowing extension up to the age of 99 years.

Your 40s often coincide with significant financial milestones, such as buying possessions, like a house or car. These possessions not only enhance convenience for you and your loved ones but also provide you with stability and security.

However, it is common for people to finance these purchases through loans, which may extend well into their 40s and beyond. In the unfortunate event of your absence, the responsibility to settle these loans falls upon your family members.

Securing a term insurance policy provides your loved ones with a safety net to settle these outstanding loans in your absence. Term insurance ensures that your family can retain ownership of these assets and continue to benefit from the comfort and security they offer.

In your 40s and 50s, you have likely settled into a stable phase of your career, no longer chasing after new jobs or degrees. With years of experience under your belt, you are could be earning a good salary. However, as your income rises, so do your tax obligations. This is where finding legal ways to lower your tax burden becomes essential for boosting your savings.

Term insurance can be a helpful tool for tax savings. You can claim tax deductions under multiple sections of The Income Tax Act, 1961. For instance, you can claim up to ₹ 1.5 lakh in a financial year under Section 80C on the premium paid. If you have additional riders, such as a critical illness rider, you can claim another ₹ 25,000 under Section 80D for a plan bought for yourself. Furthermore, the maturity benefit is also tax-free for your loved ones under Section 10(10D).

So, besides providing financial security, term life insurance can also offer tax benefits, making it a smart choice for your financial planning in your 40s.

As your children stand on the brink of graduating high school or entering higher education like college, it is crucial not to overlook any aspect of their future. The upcoming years hold immense importance for their growth and aspirations. They could be heading off to college, pursuing post-graduate studies, travelling or even venturing into entrepreneurship. As a parent, it is your responsibility to ensure they have the necessary financial support to pursue their dreams.

In the unfortunate event of your absence, your children may face challenges in fulfilling their aspirations and may be forced to compromise on their goals. A term life insurance policy helps you provide your children with the financial means to pursue their dreams without any interruptions. It can empower your children to fulfil their potential, even if you are not around to provide for them.

One of the primary concerns when purchasing a term insurance plan later in life is the potentially higher premium compared to buying it at a younger age. However, despite the higher cost, buying term insurance in your 40s is still a prudent decision. Term insurance is a crucial safeguard for your family's financial security, and obtaining it now versus later can ultimately save you money in the long run.

There are strategies to lower the premium. For example, maintaining a healthy lifestyle can significantly reduce your premium rates. If you are in good health at 40 and have no lifestyle habits like smoking or excessive drinking, insurers may offer you lower premiums. Additionally, women generally have a higher life expectancy than men, which can translate to lower premiums for them.

You can use a term insurance calculator to ascertain the premium based on your unique insurance needs, age and gender.

While the premium for term insurance may be higher when purchased later in life, the benefits of having it are significant. There is never a better time to prioritise your family's financial security than the present. So, if you have not yet bought term insurance, your 40s can be as good a time as any to do so.