Why To Pay Term Insurance Till 60 Years
Why To Pay Term Insurance Till 60 Years
11/6/23 11:26 AM
Term Insurance is an affordable life insurance product that provides life cover in case of the policyholder’s premature death. It is an essential addition to your portfolio, as it can provide financial security to your family in case of your untimely demise during the policy term.
Usually, people buy term life insurance coverage until the age of 60, and for good reasons. Let us take a look at the basics of term insurance to understand why paying for a policy till the age of 60 is a wise financial decision.
What is the Age limit for Buying Term Insurance?
One of the most common questions that any customer may have is – up to what age should term insurance be taken?
Usually, most insurance companies offer a policy term between 5 to 85 years, while some may go as high as 99 years of age. One should always opt for a policy term depending on their retirement age. It can vary of course. For instance, if you opt for 65 years as retirement age, there could be someone else who would opt for 70 as retirement age.
When selecting the term cover, keep your retirement age in mind. Ask yourself things like- how long your family will be financially dependent on you and when your liabilities will be paid off. You can determine the correct course of action by asking yourself questions like these.
How to Decide the Ideal Policy Term?
There is no right answer to the question, “what is the best policy term?” The fact of the matter is that each individual has their own financial plans and retirement needs. As stated above, a policy term should keep you covered at least until you retire. However, if you are a young person then you might want to take shorter policy terms, as your income has the potential to grow, and the coverage provided by your very first plan might not be sufficient to support your family ten years in the future. Financial planning plays an important role in choosing your ideal policy term.
Advantages Of Paying for Term Insurance Till 60 Years of Age
- No Dependents : One of the most important reasons to buy term life insurance is to secure the life of your dependents if something unfortunate were to happen to you. In the initial stages of your career, your financial dependents might be your children, spouse, or aged parents.
However, this equation changes after 60, especially regarding your children. Generally, by the time you are 60, your children are old enough to earn for themselves, and you need not have a term insurance plan to secure their futures.
Moreover, because you have retired, the term insurance premium will probably have to be paid by your children on your behalf. This is why extending your term plan beyond 60 is not a wise financial decision in the long run.
- Premium Payment During Salaried Years : Making term insurance premium payments is easier when you have a fixed income, in the working years of your life. While the retirement age is being pushed and individuals are extending their work-life, generally, 60 is when most working professionals choose to retire.
Post-retirement, the monthly spending budget is revised, and you tend to cut down on extra expenses. Premiums for a term plan might be one of these. On the other hand, when you are earning, you can easily set a specific amount aside for paying the term insurance premium.
Premium payments don't burden your pocket when they are completed at the right age. Hence, the policy term should coincide with your working years so that the premiums feel easy on the pocket.
- Worry-Free Retirement : Building on the last point, the second innings of your life should be free from financial liabilities. You make investments in the initial phase of your career to reap its fruit during retirement when you don't have an income source supplemented by a work-life.
However, if your term insurance continues beyond 60, this mandatory premium payment might affect your retirement funds rather than be a beneficial investment. Experts recommend early investments in plans that will provide you with passive income to support your lifestyle during retirement.
Term Beyond 60: Policy Terms Based on Your Age Group
While most people generally stop their term plans in their 60s, that does not mean that there are no benefits to continuing your term insurance beyond 60. Some term plans can even be taken up to age 100, providing life cover for your entire life. You might want to continue your term plan beyond 60 in the following cases:
- You still have dependents even after retirement and want to financially safeguard them in case of your death
- You continue to work after 60 and have enough income to pay for premiums
- You have enough savings post-retirement to safely pay for premiums and want the term plan coverage to provide a financial boost to your children/successors when you pass away
Important Considerations Before Buying Term Insurance
Each person has different financial requirements, and hence, an individual will also have his or her own term insurance needs that differ from others. Amongst the numerous term insurance benefits, flexibility is perhaps one of the greatest, enabling insurance seekers to choose the best term insurance plan that addresses their concerns. A term policy can be bought either offline or online, with the latter being the preferred mode for many today.
As a term plan secures the financial well-being of your family, it is crucial to do adequate research before investing in a policy. When you buy an online term plan, you can compare different policies to find the one that suits your needs. Here are the things you must ensure before purchasing an online term plan:
- Reliable Insurance Provider : Choosing the right insurer is just as important as choosing the right insurance coverage. You must undertake an analysis to check whether the insurance provider has the financial health to validate your claims. This can be determined by looking at the solvency ratio of the company. You must also check the insurance provider's claim settlement ratio (CSR) to check their credibility. CSR indicates the number of claims settled by the insurer against the total number of claims received in a particular year.
- Determine Your Coverage Requirements : Every insurance seeker must look at their lifestyle to determine how much financial coverage they need. In addition, it is also essential to observe your liabilities, such as any loans you may have taken, and add that to the coverage amount. Finally, factor inflation into your coverage amount to ensure comprehensive financial protection for your loved ones.
- Suitable Riders to Enhance Your Plan Benefits : Amongst the best term plan benefits is that it enables you to enhance your cover with a choice of add-ons to your base policy. In addition, if the policyholder dies due to any of the conditions specified in the rider policy, the nominee receives an additional amount over and above the death benefit. With increasing health risks and soaring hospital bills, a critical illness rider is recommended to every policyholder. In addition, for individuals who travel a lot, an accidental death benefit rider can be highly beneficial.
Buy Online Term Insurance
Term insurance benefits are better when insurance is purchased online. It enables a more straightforward comparison of the policies available online and helps you save more on the policy. In addition, the term plan premium is cheaper when you purchase it online instead of in person, which makes your policy cost-effective. Furthermore, digital payment options ease online premium payments and insurance purchases considerably.
The Edelweiss Tokio term plan has many attractive features that ensure comprehensive financial protection. For example, after selecting the suitable term insurance cover, the policyholder can either pay the premiums to the age of 60 or until the conclusion of the policy term based on their preference. Term insurance tax benefits u/s 80C of the Income Tax Act also ensure that the premiums you pay towards the policy are deducted from your taxable income (up to ₹1.5 lacs).
A term plan is an essential investment for the financial health of your loved ones. However, to avail yourself of the various term plan benefits, ensure that you choose the right cover and the duration of your term insurance policy.
Swati Tumar - Travel & Finance Writer
Swati is a Writer in the day and an illlustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.