I am 27 years old and unmarried. What should be the duration of any endowment plan that I take—15, 20, or 25 years?
Ramesh Kumar, Jaipur
The duration of a life insurance policy depends on a number of factors like the income and age of the individual buying it, and the ages of his dependents. Therefore, the policy term should be determined on a case-to-case basis. You can opt for the longest term, say, of 25 years, because you are very young and yet to start a family. Age also determines the earning life of a person. A person aged 30 years has an effective earning life of more than 25 years, whereas a 40-year-old has about 18 years of effective earning life left (subject to other factors also). Ideally, the term of your policy should be equal to the number of years your family is likely to be financially dependent on you. Another aspect one has to see is how long one can support a policy in terms of payment of premium. One has to strike a balance between the premium payment term and the period of risk cover. Many products in the market allow selection of a shorter premium payment term to suit the policyholder’s earning life while covering his risk for a longer period of time.
