Senior citizens are individuals aged 60 years and above and many term plans allow coverage for older individuals. However, it is necessary to understand the terms and eligibility criteria to make an informed decision when buying term insurance for senior citizens. Let’s understand in detail.
Reasons Why Senior Citizens Should consider Investing in Term Plans
Here are some of the reasons why senior citizens should invest in term plans:
1. Covers the loss of income:
Some senior citizens might continue working even after retirement and their spouse might depend on them for their financial needs. In their absence, the family would suffer a financial loss and a term insurance policy comes in handy. With the death benefit payable under the term plans, the family cover the loss of the income arising out of the death of the insured. Some term plans also offer the death benefit in the form of regular pay-outs which can act as a supplement to the retirement income providing an additional layer of financial security.
2. Meets healthcare expenses:
As individuals age, the likelihood of medical conditions and facing health issues increases. Term insurance plans with the added critical illness rider can be beneficial in helping you meet your healthcare expenses and ensuring that you receive the necessary medical treatment without straining your finances. The rider covers specified illnesses and pays a lump sum benefit if the insured is diagnosed with any of the covered illnesses. This benefit can help senior citizens meet their healthcare expenses and afford advanced treatments.
3. Meets any unpaid financial obligations:
Many senior citizens may have outstanding loans such as home loans, children's education loans, etc, which can lead to significant financial obligations and a burden on the surviving family members. Term insurance can cover these liabilities. Senior citizens can opt for mortgage redemption term plans to cover particular debts. Even a normal-term plan can pay off the outstanding liability if the insured passes away prematurely.
Features of Term Insurance For Senior Citizens
Some of the salient features of term insurance for senior citizens:
1. Age Limits:
Term insurance plans usually have a minimum and maximum entry age limit. Senior citizens falling within the prescribed age limit can buy the policy. It is necessary to check the maximum entry age and maturity age to know if you can buy the plan and how long can you enjoy the coverage.
2. Higher premiums:
Term plans have higher premiums for people of higher age groups. Moreover, senior citizens might have existing health issues which results in increased premiums.
3. Limited Period of Coverage:
Term insurance plans might have a maximum cover ceasing age. Senior citizens can, thus, buy the plan for a limited coverage tenure. For instance, if you buy a term plan having a maximum maturity of 75 years, at an age of 65 years, you will get coverage only for 10 years
4. Medical Check-ups:
Senior Citizens might be required to undergo a pre-entrance medical examination during the application process. Depending on the reports of the medical check-up, the premium and coverage are determined.
Steps to Buy Term Insurance
Buying term insurance is very simple. Here are the simple steps to buy term insurance:
- Visit the website of the insurance service provider whose term insurance you want to buy.
- Explore their range of term insurance products and select the one which aligns with your specific insurance needs and preferences.
- Choose a suitable tenure and sum assured. Further, you can also include optional riders to expand your coverage benefits, on payment of additional nominal premium.
- After finalising the coverage details, move to make the payment through the secured payment gateways offered by the insurance provider.
- Following the issuance of the term insurance policy, you will get a digital copy of the policy document in your registered email. The physical copy will be sent to your registered address after a few days.
In the case of medical check-ups, you would have to undergo a pre-entrance health check-up before the policy is issued. You can also buy the policy offline through an intermediary or through the insurance company’s branch office. To buy offline, fill out the proposal form physically, submit your relevant documents and pay the premium. The insurer would underwrite the proposal and issue the policy.
Tips to Consider While Finding Suitable Term Life Insurance For Senior Citizens
When exploring a suitable term plan for senior citizens, consider the following tips:
1. Period of Coverage:
Evaluate and compare the period of coverage in different term plans. Select a period which aligns with your life expectancy and financial needs. Some term insurance comes with a longer period of coverage say, up to 75 years, you can opt for such plans with a long coverage period. Further, there are also term plans offering whole-life coverage i.e. up to 99 or 100 years of age. Such plans can give long-term protection and are recommended.
2. Premium Payment Term:
It is also necessary to understand the available premium payment terms – regular, limited or single pay. Some term plans offer flexibility in the premium payment frequencies such as monthly, quarterly, half-yearly, or annually. Select a payment schedule which aligns with your financial planning.
3. Term Insurance Tax Benefits:
Explore the tax benefits associated with term insurance plans for senior citizens. Term plans offer tax benefits u/s 80C of the Income Tax Act of 1961 along with Section 10 (10D), subject to the satisfaction of conditions specified therein. Premiums paid for the term plan may be eligible for tax deductions of up to Rs. 1,50,000 u/s 80C of the Income Tax Act under old regime of Tax. The above mentioned benefit is available under old tax regime.
Also, the death benefit received by the nominee is exempted in their hands1.
4. Add-on Riders:
Check the availability of add-on riders. Term insurance plans for senior citizens may offer several optional riders such as critical illness rider, accidental death benefit rider, accidental permanent total/partial disability rider, etc. to enhance the coverage of the basic term plan. Consider adding riders which address your unique insurance needs.
Conclusion
A term insurance policy proves invaluable not only in your early years but also emerges as an indispensable tool in the later part of life. If you are above 60, check which term plans are available and choose a policy which meets your coverage needs. Buy term insurance and enjoy financial security even in your older age.
FAQs
1. What is the purpose of term insurance for seniors?
A term insurance plan for senior citizens can provide financial security to senior citizens and their families by covering the risk of premature demise. If the senior citizen is still working and contributing financially, his premature demise would incur a financial loss. Term plans can cover this loss and help the family financially. Moreover, if senior citizens have any existing debts, the term plan can pay off the debt in the insured’s absence.
2. What are the available premium payment options for senior citizens?
Usually, term plans offer different types of premium payment options which include regular premiums, limited premiums and single premiums. Under regular premiums, you pay premiums for the entire policy tenure while under limited premiums, premiums are payable for a limited period of time. For single premium plans, senior citizens have to pay the premium in a lump sum amount when buying the policy.
3. Is it possible for seniors with pre-existing health conditions to buy term insurance?
The availability of a term insurance plan for senior citizens with an existing health condition depends on the insurance company and its underwriting policies. If the existing health condition is not very severe, coverage might be granted. However, the premiums are usually high and the coverage might also be restricted.
Reference 1. https://www.livemint.com/money/personal-finance/how-life-insurance-policies-are-taxed-11665145664260.html
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