Till what age should your life insurance cover you?
Life Insurance Policy is an essential part of a household as investors' take out precious funds from their monthly savings to invest in the premiums of a policy that would help them secure peace of mind for their beloved family during difficult times. Thus a life insurance policy hedges the risk of loss of income for your dependents in case of the investor's untimely demise. Notice the key point here – dependents. This is the answer to the question on 'for what term should you take your life cover'.
Since your insurance cover is to provide for your dependents in your absence, you need a policy term till the time your family is dependent on you. Thus, if you are thirty years old, and have a one year old kid, you should probably go for a policy term of 25 years. This means, that your kid may not need to depend on your insurance cover once he is 25-years-old and starts earning and is able to support himself and dependents in the family.
While calculating the term for a policy, one should also factor in retirement plans. Since you would not be working post your retirement, you will be dependent on the money coming from the various savings or pension plans that you invested in throughout your working life. For example, if you are thirty years old right now, and hope to retire by sixty, then your policy term should be at least 30 years.
So taking both the scenarios into consideration, of dependents time period till being independent and your retirement, one should look at an insurance term policy of about 25-30 years. However, this is assuming that you are taking a policy when you are just starting a family and are about thirty years old. In case one is past that age and is evaluating an additional insurance policy apart from existing ones, then the easiest way to calculate this is to look at how many years are left to one's retirement. This timeframe should be the term for your insurance policy.
So to summarize, remember that your insurance cover is aimed at covering your family till they are dependent on your monthly income. Thus a bucket age for your life cover should be the age you retire.