Retirement! The one period in life that lets you enjoy its quiet moments, realise the beauty of your efforts and observe the satisfaction of the purpose of your life. All your hard work over the past decades have paid off to offer you the reward of relaxation. However, one question may still stick in your mind- is your retirement life secured enough?
- Term insurance is an insurance policy that provides life cover for a specified period. If an unfortunate event happens during this term, the beneficiaries would receive the maturity benefits.
- Thus, term insurance safeguards your family against any unexpected event causing a dent in finances. The coverage period can range from as low as 5 years to as high as 30 years.
- Due to lifestyle changes, financial liabilities may get carried till retirement. The elderly population would grow exponentially by 20% by 2050. Hence, the conditions of term insurance are changing as per the change in the Indian age demographic.
Are Retirees Eligible for a Term Insurance Plan?
- The insurance company will be concerned with a lower risk of payment of maturity benefits. It is at a profit if it is not liable to pay maturity benefits. This usually happens when the insured has a healthy lifestyle and good medical history.
- Thus, even if one is above 60 years of age, it is still possible to obtain term insurance. However, the insurance company will carry out several tests to check for terminal illness or any other health issues.
- Given the risk of a higher probability of payment of the maturity benefits, the insurance premium would be costly. To understand the actual outflow, you may use a term plan premium calculator.
Should Retirees Get Term Insurance?
To answer this question, we need to dive deep into the benefits of term insurance for retirees:
Offers Financial Assistance
The first and foremost benefit of term insurance is the financial assistance it offers when you need it the most.
As the age increases, the risk of requiring costlier medication increases. Term insurance can support the rising cost of medicines and treatment. Whereas, depending on the policy, health insurance may offer limited coverage. Term insurance provides more thorough financial assistance through its higher coverage.
Support Family Needs
The normal retirement age is around 65 years. If the rest of your family depends on you for their survival needs, it would be an uphill task for them to manage finances in your absence. Thus, a term plan would help you ensure that your family does not struggle for their survival and can maintain the same standard of living. However, you need to then estimate the ideal coverage amount using a term insurance premium calculator.
Benefit from Taxation
Irrespective of your current age, the Income Tax Act, 1961 allows for deductions where certain instruments are concerned. Deductions from income tax under Section 80C are allowed when you pay a premium for life or term insurance. Moreover, Section 80D allows for the deduction of premium paid if you had opted for health-related riders such as hospital care, surgical care, etc. Section 10 (10D) allows for an exemption to the nominees in case of receipt of maturity benefits.
Lower Premium is Possible
If the insured takes the policy for a longer term, the insurer has a lower risk of paying maturity benefits. It lowers the cost of the premium.
You may select a longer period if you are confident of your lifestyle and health habits.
Takes Care of Debt Liabilities
Normally, retirees have lower debt payment obligations. However, if you have leftover debts, the term insurance plan covers the risk of non-payment due to undesirable events. The pay-out amount will cover the balance portion of debt and relieve your loved ones from debt obligations amid an emotional crisis.
Timely Support to Nominees
Your beneficiaries will not need to work part-time to obtain immediate financial shelter in a crisis. The process of claim settlement is quick enough to provide them with timely financial assistance. Also, it has been observed that if the policy is active for more than 10 years, the claim cancellation risk is negligible. If you disclose all necessary information when applying for a term plan, the insurer cannot deny claim rights.
If the insured’s family lacks funds, the term plan’s coverage amount can easily take care of funeral costs. It is suggested that the cover amount should be at least 10 times higher than the annual income of the insured. In this way, it can take care of even the minute costs.
Life is unpredictable. Observing all the benefits it offers, term insurance becomes a must for all stages of life. Today, the premium costs are low enough to make it affordable to the majority of the public. At the cost of a higher premium, based on the risks, insurance companies can provide cover to retirees as well. They may even tailor the coverage amount as per your needs as a retiree.