Term insurance is a life insurance that secures your family financially for a specified period. In case of your untimely demise during the policy period, the insurance company pays a death benefit to your beneficiaries.
Buying a term insurance policy at an early age is essential to lock in lower premium rates. But you can purchase a term policy even after the age of 60 when you become a senior citizen. Age is no barrier, as the features of the term policy remain the same.
Interestingly, an individual can buy term insurance for senior citizens on behalf of their elderly parents to ensure the family remains protected.
Why Term Life Insurance is Crucial for Senior Citizens?
As we age, our financial obligations may reduce, but they don’t vanish altogether. In fact, the need for thoughtful financial planning becomes even more important. For senior citizens, term insurance remains a valuable safety net—ensuring that their loved ones are not left with financial strain in their absence.
Here’s why term insurance is worth considering in your senior years:
- To Leave a Lasting Legacy: A term plan can help you pass on a *tax-free*e inheritance, since the death benefit paid to the nominee on the demise of the policyholder is exempt from tax under section 10 (10D) of the Income Tax Act 1961. This, offersing your family a long-term financial stability after your demise.
- To Ensure Your Family’s Financial Freedom: It provides your loved ones with the means to manage day-to-day expenses and maintain their lifestyle without worry.
- To Safeguard Your Spouse and Children’s Future Goals: Whether it’s funding your spouse’s healthcare needs or supporting your children’s financial aspirations, term insurance acts as a reliable backup.
- To Cover Outstanding Liabilities: If there are any large debts or loans pending, the payout from a term plan can prevent your family from shouldering those burdens.
Features of Term Insurance for Senior Citizens
Here are the salient features of term insurance for senior citizens:
- Age limit: The minimum eligibility age for term insurance is 18 years. Most policy providers have an entry limit of 60 or 65 years. However, senior citizen term insurance specifically caters to people from 60 to 85 years or more.
- Death benefit: Term plans are pure protection plans. So, if something happens to you during the policy term, your family will receive the sum assured as the death benefit.
- Medical test: The prospective policyholder has to undergo a medical test to inform the insurer of any pre-existing lifestyle conditions. Diabetes, cardiovascular disorders, or other such conditions can impact the premium payable for a senior citizen term plan.
- Premium payable: If there are any large debts or loans pending, the payout from a term plan can prevent your family from shouldering those burdens.
- Riders available: You can integrate add-on* covers to the existing policy at an additional cost. Examples of riders include terminal illness cover, premium waivers, accidental death benefit, return of premium, etc.
*Add-ons are subject to payment of additional premium.
Benefits of Term Life Insurance for Senior Citizens
- Despite the higher premiums to cover the potential risk to senior citizens’ lives, this term insurance is more affordable than other types of.
- Most term plans have a maximum entry age of 60-65 years. But term insurance plans for senior citizens have a wider entry age of 60-85 years with whole life coverage.
Limitations of Term Life Insurance for Senior Citizens
While term insurance for senior citizens is to safeguard their families in the long run, it is not without its drawbacks:
- No cash value accumulation: Unlike other life insurances, such as endowment plans, money-back term insurance, Unit Linked Insurance Plan (ULIP), or whole life insurance, the term insurance has no cash value if you outlive the policy term.
- Higher premiums with age: As you age, the premiums also generally increase.
How to Choose the Right Term Life Insurance for Senior Citizens?
Making sound financial decisions becomes even more critical in your later years. Choosing the right term insurance plan as a senior citizen requires careful evaluation of your needs, health, and long-term goals. Here’s what to keep in mind:
1. Choose the Right Sum Assured
Assess your family's financial needs and liabilities before deciding on the sum assured. While higher coverage offers greater security, it also increases the premium. Balance is key.
2. Select a Suitable Premium Payment Term
Evaluate your income sources—like pension, savings, or rental income—and choose a premium payment frequency that works for you. Most insurers offer monthly, quarterly, half-yearly, or annual payment options for convenience.
3. Decide on the Coverage Period
Term insurance typically offers coverage for a defined period, depending on age, gender, and health conditions. However, many insurers also offer whole-life options (up to 100 years or more), which are ideal for those looking to leave behind a legacy or for estate planning.
4. Explore Add-On Riders
Riders like accidental death benefit, critical illness cover, or waiver of premium or can enhance your plan’s protection. Choose riders that align with your specific health risks and financial concerns.
5. Check the Insurer’s Claim Settlement Ratio (CSR)
Always go with an insurer that has a CSR of over 95%. This indicates a strong track record of settling claims promptly and reliably—something that brings peace of mind when it matters most.
Know more about claim settlement ratio
Exploring Additional Riders and Their Benefits
Optional riders and add-on benefits can enhance the term plan for senior citizens. Some of the commonly available options are:
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