What is the maximum age we can benefit from term insurance? Like when does it expire if it does, like if I reach 70 or something.
With term insurance, the beneficiary will get the money when the insured passes away. There is no time period set
I think the policy stays active till the time the person chooses the term. If it is a pure term plan, with no guaranteed money back, the policy expires if the insurer is alive, if the insured is not alive before the term, then sum insured amount is paid.
Oh okay i think i asked my question wrong. What is the maximum term available in the market?
I don’t know but I think it could even be 100. But one argument that exists for the term is, till the time we will have dependents on us. So even if for a man who has children, I think 70 is enough. We are talking about term policy here, the policy which pays in the absence of the insurer, and not a health policy whose benefit the insured will have.
As the companies cannot say how many years a person will live, I think they will provide cover till 100 years, because it benefits them
But how will the term insurance company make profit if they insure me for 100 years. I will die and they have to give payout. I thought there was maximum age limit or something.
Need not be. Just like stock market, insurance is also a game of probabilities. Total number of policies, total of sum insured, total of premiums collected, policy holders belonging to different age groups, smokers, non smokers, term till they want to be insured, etc. etc. come into the equation.
Insurance was a wonderful business, Warren Buffett built an empire with the help of insurance. Claims are less compared to the premiums collected and are invested elsewhere, making the company profitable. Of course there are many many moving parts, complex business, and obviously many things change with time.
Just giving you a broad limited point
It is for this reason, analysing a Insurance company financials is complicated (for me), it is not like the standard ones we have for other businesses. Accounting concepts are different.
That’s easy… they’ll charge u a hefty premium
Specifically for this, read Berkshire Hathaway’s early “Letters to Shareholders”, in which he explains it in layman’s terms. I think they’re still available on the internet. It makes for interesting reading anyway, esp since you’re an investor.
Edit: here you go… Shareholder Letters
I am a 24 year old postgraduate student with no income yet. Is it the appropriate time to buy term insurance?
One advantage that you will get if you buy a term insurance when you are very young is the lower premium that you need to pay.
Term Insurance become critical to buy when you have dependents who solely depend on you/your income for their livelihood.