Term Plan: Optimal Age, Max Cover

There is a growing trend among people to buy term insurance cover that matures after they turn 70. This is fuelled by two factors, primarily. One, the basic construct and exclusions of term insurance does not vary across insurers. So, in a bid to offer a differentiated proposition, insurers have increased the maximum age of coverage, extending it to the magical age of 100 years. Two, several insurance platforms advocate maximising the duration of the insurance cover. This leads to significantly higher premium over a longer period of time. An argument often made in favour of a long-duration cover is that it assures a payout. That is because as you grow older, the possibility of death becomes very real. This argument is, however, flawed and leads to policyholders making poor choices that end in sub-optimal coverage. The primary purpose of a term insurance cover is to replace the future...