Ask Mint | To maximize benefits, go for a long-term life insurance policy

Ask Mint | To maximize benefits, go for a long-term life insurance policy

Term life insurance plans offer financial security to your dependents in the eventuality of your death. They ensure that your family members maintain their standard of living in spite of the drop in income. It is the simplest form of life insurance. The term plan works like a contract that provides a specified death benefit, but has no cash build-up or investment component. Since the premium for a term plan is low, a person may get adequately insured for a relatively low premium cost. Also, remember that the earlier you buy life insurance, the lower the premium. You could also consider a term with return of premium if you seek a capital guarantee on your invested amount.

I am a 30-year-old man. I have been investing in short-term investment instruments such as mutual funds, etc. I plan to invest money in a life insurance plan this year. How long does the term of the policy have to be?

We advise people to invest for the long term because whether you take traditional plans or unit-linked insurance plans, life insurance plans are most beneficial in the long term. The term you choose can depend on your own personal circumstances, though it would be advisable to look at terms of 10 years and above to maximize benefits.

Readers are welcome to write in with their queries to The questions will be answered by senior executives from leading insurance firms.

This week’s expert is Rajesh Relan, managing director, MetLife.