What is Term Insurance for Senior Citizens?
Term life insurance plans are quite an important addition to the financial portfolio of younger individuals. Moreover, it is also advised to buy term insurance as early in life as possible to get a relatively lower premium amount. While these statements are largely accurate, it would be incorrect to assume that there lies the unavailability or redundancy of term insurance for senior citizens.
In India, the phrase “senior citizen” is used to refer to individuals over 60 years of age. It is commonly assumed that these folks are retired and living on pension or investment income rather than having a primary source of income, such as a monthly salary.
Term insurance for senior citizens caters specifically to the financial requirements of elderly people. It provides coverage for a pre-determined term, which can be chosen on the basis of the senior citizen's age at the time of purchasing the policy and their actual age of retirement. The plan provides the nominee/beneficiary a death benefit which can be utilised to take care of any outstanding debts or expenses (such as funeral costs).
Term insurance for senior citizens is a way for them to leave a legacy for their dependents. It can ensure that any of their liabilities do not become a burden for their loved ones, be it their spouse or children.
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How Does Term Insurance for Senior Citizens Work?
Any term insurance plan for senior citizens works fairly similar to regular term plans. You can buy any regular term life insurance policy for an older adult, provided they are eligible for the same.
A common concern when buying term insurance for senior citizens above 60 years is that they may not fulfil the age eligibility criteria for the policy. An important consideration when buying term insurance is that these plans may not be available for purchase for people beyond a certain age, usually 65 years. However, this criterion may differ across plans. The coverage duration offered may extend close to 75 years of age, depending on the specifications of the plan.
When a senior citizen buys a term life insurance plan, they are getting a source of financial support for their dependents. In the unfortunate event of the passing away of the life assured, their nominee can claim a death benefit and receive an amount to take care of liabilities left behind by the life assured.
Why is Term Insurance Important for Senior Citizens?
There is usually not a lot of emphasis put on life insurance of any kind for older adults. However, there are several reasons why term insurance for senior citizens over 65 years of age can prove to be important.
Taking care of dependents
If you are living with a spouse, or any other dependent such as a parent, a sibling, a child, or a grandchild, you may worry about their financial future when you are gone. Term life insurance for the elderly is one of the ways to take care of this.
If an older adult wants to create an avenue to leave something behind for their family members, they can use term insurance and name multiple nominees.
Health support through riders
Riders such as critical illness and accidental permanent disability benefit can help you create a source of financial support through term insurance for uncertainties of life that can leave you more dependent on others than you already are.
If you opt for a term insurance with return of premium plan, you may also expect the premium amount you have paid into the plan, minus any applicable charges.
Features of Term Insurance for Senior Citizens
When buying a term plan for senior citizens, here are some of the key features that may come with your policy.
The fundamental feature of a term life insurance plan is a life cover for the person insured under the policy. This allows the life assured to rest easy about the liabilities they may be leaving behind for their survivors.
If the policyholder is a taxpayer under the old tax regime, they may be able to claim exemptions for the premiums paid. Benefits received from the policy may also be eligible for exemptions under the prevalent tax regulations.
Defined coverage duration
Term plans are known to offer coverage for a limited duration as chosen by the policyholder. So, if the life assured has liabilities for a specific period, they could opt for coverage accordingly.
A level term insurance plan is deemed to be one of the most affordable life cover options today. For senior citizens who are living on a limited income resource, it is ideal to opt for plans offering core coverage at cost-effective rates.
Benefits of Term Insurance for Senior Citizens
Here are some of the benefits of term insurance for senior citizens.
Compared to whole life insurance, term insurance is more affordable, making it accessible for senior citizens.
The straightforward nature of term insurance—coverage for a specific period with a death benefit—makes it easy to understand and manage.
Unlike some other life insurance policies, term insurance does not involve any market-linked investments, reducing risk.
Premiums paid towards term insurance may be eligible for tax deductions under applicable tax laws, providing additional financial relief.
The policyholder experiences a sense of confidence that their loved ones will not face financial difficulties in their absence.
How to Select the Right Senior Citizen Term Insurance Policy?
If you are an older adult in the market for a term insurance plan, here are a few considerations to keep in mind.
Consider existing debts, financial responsibilities, and the lifestyle needs of dependents when choosing the coverage amount.
Ensure the policy term aligns with your age and health condition. Shorter terms might be more appropriate for older individuals.
Use a term insurance calculator to compare premiums from different insurers and select one fitting your budget.
Assess the insurer’s reputation
Choose an insurer with a good claim settlement ratio and positive customer feedback to ensure reliability.
Consider health requirements
Some policies may require a medical examination, while others may offer coverage without one. Evaluate these options based on your health condition.
Look for additional riders such as critical illness or accidental death benefit, to enhance your coverage.
What are the Riders Available with Term Insurance for Senior Citizens
Critical Illness Rider: Provides a lump sum payout if the policyholder is diagnosed with a critical illness such as cancer or heart disease.
Accidental Death Rider: Offers an additional death benefit if the policyholder dies due to an accident.
Waiver of Premium Rider: Waives future premiums if the policyholder becomes permanently disabled or critically ill.
Income Benefit Rider: Provides a regular income to the family for a specified period after the policyholder's death.
Hospital Cash Rider: Offers daily cash benefits during hospitalization, helping to cover medical expenses.
What are the Things to Consider While Buying a Term Plan for Senior Citizens?
Health: The health of the individual to be insured plays a significant role in determining the premium and eligibility for term insurance.
Policy Term: Choose a term aligning with your financial responsibilities and life expectancy.
Sum Assured: Ensure that the sum assured is sufficient to cover your family’s needs, including debts, medical expenses, and daily living costs.
Premium Affordability: Ensure that the premium is affordable, considering your fixed income or retirement savings.
Insurer’s Credibility: Check the insurer’s claim settlement ratio and customer reviews to gauge reliability.
Policy Exclusions: Be aware of any exclusions or conditions that may affect your coverage, such as pre-existing health conditions.
Click here to get premium estimates for with our online term insurance calculator.
Frequently Asked Questions (FAQs)
What is the maximum age to purchase term insurance for senior citizens?
It typically ranges from 65 to 75 years, depending on the insurer.
How do you determine the required life cover?
It should be based on your financial responsibilities, existing debts, and the future needs of your dependents. It’s advisable to use a term insurance calculator to estimate the appropriate sum assured.
How to purchase the best term insurance plan for senior citizens?
Compare various plans based on premium, coverage, policy term, and additional benefits. Consider using online comparison tools for a comprehensive evaluation.
What are some key factors that can impact the term insurance premium for senior citizens?
Key factors include age, health condition, lifestyle habits (such as smoking), and the chosen sum assured. A medical examination may also influence the premium.
Do senior citizen term plans come with a regular income payout option?
Yes, some senior citizen term plans offer a regular income payout option, which provides the death benefit in instalments, ensuring ongoing financial support for the beneficiaries.
What is the oldest age to get term insurance plans for senior citizens?
The oldest age to get term insurance for senior citizens is generally around 75 years, though this can vary by insurer.
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