Choosing the right term life insurance: A guide to coverage and investment needs

There lived two inseparable sisters, Lianna and Diana. Aged 9 and 15, respectively, the sisters were not just connected by blood but also by a unique understanding of their family’s financial well-being. One evening, as they sat in their cosy living room, flipping through their favourite storybooks, the topic of life insurance unexpectedly surfaced.

Lianna, the younger of the two, curiously asked Diana, “What’s this term life insurance that mom and dad keep talking about? Is it something like the fairy godmother’s magic, but for grown-ups?”

Diana, being the responsible elder sister, smiled and began explaining, “Well, Lianna, term life insurance is not magic, but it’s like a protective shield that our parents have for us. It’s a way of ensuring that if anything were to happen to them, we would be financially secure.”

Intrigued, Lianna questioned further, “But why do they need it? Can’t they just save money?”

Diana, always the one with a knack for explaining complex topics in simple terms, replied, “Saving money is good, but life is uncertain. Term life insurance is like a promise that if something unexpected happens to our parents, the insurance company will provide a lump sum amount to make sure we can continue living a good life.”

The sisters decided to delve deeper into the topic, involving their parents in the conversation. Over dinner, they discussed the importance of term life insurance. The parents, impressed by their children’s curiosity, decided to make it a family affair and learn together.

As the family delved into life insurance, Lianna and Diana crafted a list of tips to help their parents choose the right life insurance plan. 

Term length

Choosing the right term length is crucial. Align the term of your policy with your long-term financial goals and the anticipated time it takes for your dependents to become financially independent. This thoughtful selection ensures that your insurance coverage serves its purpose during the critical periods of your family’s financial journey.

Assessing coverage needs

When determining your coverage needs, take a comprehensive approach. Calculate the amount required by considering outstanding debts, anticipated future education costs for your dependents, and the day-to-day living expenses your family will incur. This holistic evaluation ensures that the coverage amount adequately safeguards your family’s financial stability.

Budget constraints

Evaluate your budget constraints realistically. Identify a premium amount that aligns with your financial capabilities throughout the policy term. Striking a balance between coverage and affordability guarantees that your insurance plan remains a sustainable and effective part of your financial strategy.

Comparing quotes

When shopping for a life insurance policy, resist the urge to settle for the first quote. Conduct thorough research by comparing life insurance quotes from multiple insurance providers. This proactive approach ensures that you find the best value for your money, optimising the benefits of your life insurance plan.

Inflation consideration

Factor in inflation when determining your coverage amount. What may seem sufficient today might fall short in the future due to the rising cost of living. Accounting for inflation ensures that your policy’s coverage maintains its relevance and adequacy over time.

Policy riders

Explore additional policy riders to enhance your coverage. Critical illness or disability riders, for instance, can provide added protection. Tailoring your policy with these riders ensures a more comprehensive coverage that addresses specific risks your family may face.

Policy details

Scrutinise the policy documents meticulously. Reading the fine print is essential to understanding the terms and conditions, ensuring that you’re fully aware of all aspects of your policy. This diligence helps avoid any hidden surprises down the road.

Understand exclusions

Familiarise yourself with policy exclusions to be aware of situations in which the insurance provider may not pay out. This clarity allows you to make informed decisions and better understand the limitations of your coverage.

Claim settlement ratio

Check the insurer’s claim settlement ratio. A higher ratio indicates the efficiency of the insurer in settling claims, providing confidence in the reliability of the chosen insurance provider.

Conversion options

Explore whether the policy offers options to convert a term life insurance plan into a permanent policy in the future. This flexibility accommodates changes in your financial situation and long-term planning needs.

Financial strength

Opt for an insurance provider with a strong financial standing. This choice ensures that the insurer can fulfil their commitments in the long run, offering the stability needed for the financial security of your family.

Lifestyle and health

Be prepared for health checkups if required by the policy. Ensure that your health is accurately represented to avoid complications during the application process.

Policy flexibility

Look for policies that offer flexibility in premium payments. This feature allows you to make adjustments based on your financial situation, ensuring that your policy remains adaptable to your evolving needs.

Hobbies and lifestyle

Disclose hobbies and lifestyle choices honestly, as they might impact the policy terms or premiums. Transparent communication prevents any discrepancies that could affect your coverage.

Grace period

Check the grace period provided for premium payments. Understanding this period is crucial to avoid policy lapses during financial challenges, providing a safety net for unexpected situations.

Investment components

If considering a policy with an investment component, understand how the cash value grows over time. Assess the associated investment risks and ensure they align with your risk tolerance and financial goals.

Policy renewal

Understand the renewal options, especially if you’re considering extending coverage beyond the initial term. Knowing the renewal terms ensures continued protection for your family in the future.

Family dynamics

Clearly designate beneficiaries and keep the information updated, especially in the event of major life changes like marriage or divorce. Open communication about policy details with family members ensures collective awareness of the coverage and its benefits.

Term conversion options

If possible, select a policy that allows for conversion to a permanent plan. This feature provides flexibility as your needs change over time, accommodating shifts in your financial situation or family dynamics.


Keep all policy-related documents, including contact details for the insurer and agent, in a secure and easily accessible location. Organised documentation ensures quick access to crucial information when needed.

Future planning

Regularly review your policy to ensure it continues to meet your evolving financial needs. Consider consulting a financial advisor to align your life insurance plan with your overall financial strategy.

Policyholder’s rights

Understand your rights as a policyholder, including the ability to surrender the policy or make changes when necessary. Knowing your rights empowers you to make informed decisions about your insurance coverage.

Days passed, and the family carefully selected the perfect term life insurance plan. It was an insurance that not just offered financial security but even provided investment opportunities for the future. 

The story concludes with Lianna and Diana receiving a small surprise from their parents. The parents had decided to start a savings account for each of the girls, using the knowledge gained from their exploration of life insurance. The surprise was a symbolic gesture, teaching the sisters the importance of financial planning from an early age.