I’m 55 years old and have accumulated Rs 80 lakh in PPF, Rs 50 lakh in mutual funds and enjoy two houses. My yearly income is Rs 20 lakh. Do I need to buy term insurance at this age?
JayantR. Pai, CFP and Head of Marketing, PPFAS Mutual FUND replies Term insurance is required to bridge the gap between one’s wealth-after deducting debt-and financial aims, in case one passes away before the aims are met. With age, this gap normally reduces, and so the need for term insurance also becomes lower. While it does appear that you have enough fund for your family to fall back on in the unfortunate event of your demise, as you haven’t mentioned your liabilities and financial aims, it’s advisable that you discuss all the details with a financial consultant before taking a decision.
My father is 58 years old and has lately retired. I want to buy a critical illness insurance cover for him. Given the spurt in cancer cases, should I buy a dedicated cancer policy or a policy that covers other critical diseases as well? Please suggest plans.
Yashish DahiyaCo-Founder and CEO,Policybazaar.com replies Standalone cancer covers are cheaper and their benefits protest in from the first stage of cancer. Still, it’s judicious that you buy a critical illness policy for your father as it covers a wide range of illnesses, including cancer. You may consider Edelweiss Tokio Life Criticare that covers 17 critical illness for 12 years and comes at a premium of Rs. Unborn Generali Life Critical Illness plan covers 59 critical illness for 17 years, but the premium will be nearly double at Rs. Both these policies offer a one- time benefit of Rs 10 lakh in case the insured contracts any of the illnesses the separate plans cover. Standalone cancer policies with sum assured of Rs 10 lakh will bring around Rs for a 17- year term and around Rs for a 22- year term.
What is Term Insurance | Term Plan Meaning & Benefits
It’s easy to feel a little once your prime by the age of 50, especially in today’s youth-centric world. Still, turning 50 is a watershed moment in one’s life. This age won’t only provide you with chances, but also present you with obstacles. The good news is that you’ll most probably make further money in your 50s than you did early in your career, affording you financial freedom. At the same time, you may be faced with more large costs, similar as your children’s higher education or marriage, or indeed the prospect of buying a new house.
In such a situation, if, for example, your existing life insurance policy term gets over, or you have not even bought a policy yet, then should you renew or buy a term life insurance when you turn 50’s?
Let us talk at the pros and cons.
Pros: One advantage of buying a term insurance policy at 50 is that it can give financial support to your children or family members who are financially dependent on you in case reality unfortunate happens to you. Your partner can avail death benefits of this policy in case you die, which could make her self-reliant and financially equipped. It might also help compensate for legal costs or property duties that you might have incurred. Rakesh Goyal, director, Probus Insurance, said having a term insurance policy can help your family members or dependents (post your demise) repay the hefty loans you owe. “ The term policy can offer for benefits during retirement time as it can be a good option for a regular income for the family during these days.
Cons : A disadvantage of buying a term insurance policy at 50 could be the age factor. It can be challenging to find the right plan to suit your demands at this age, and the policy premium rates would always be advanced compared with plans bought already. Also, a retiree with low savings can find it difficult to pay these high premium rates. Health factors could be another issue.
Naval Goel, founder and chief executive officer,PolicyX.com, said there are high chances of such persons contracting illnesses, which can affect the premium on account of loading charges. “ Another disadvantage for those buying term insurance at the age of 50 is the lower sum assured. While a person of 30 years of age can get a sum assured 10-20 times their current income, a person at 50 years of age will get only 5-10 times of the income sum ensured,”Goel added.
Now, let us examine the life situations that are likely to spark the purchase of term life insurance even if you’re in your 50s.
Outstanding debts Sajja Praveen Chowdary, head- term life insurance,Policybazaar.com, said there are people who haven’t saved enough or who are in debt. “ It’s possible that you may die before paying off your mortgage. To cover the specific loan amount, a term insurance policy can be purchased.However, the sum assured can be used to pay off loans while causing no inconvenience to family members,” said Chowdary, If the individual is no longer alive.
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Financially dependent children Life insurance opinions can also depend on your liabilities, and not just age. “ People no longer marry at 23 and have children between 25 and 28 years of age. Currently, one of the most common demographic shifts is that more and more people delay marriage, and starting a family. As a result, by the time one is 50, one’s children are most likely still in academy and may need your financial support; therefore, copping term insurance at the age of 50, indeed at a high premium, can be a wise decision,” said Chowdary.
Deciding factors “ The premium rates of the term insurance policies would be on the high side for people who buy a policy at or above the age of 50. But there was no right age to buy a term insurance. Sooner the better, of course, but better late than noway,” said Nayan Goswami, head of deals and service,SANA.Insure.
Adding to it,Col. Sanjeev Govila (retd), chief executive officer, Hum Fauji Initiatives, said, “ Buying a term insurance is noway to be linked to age but to the future debt — their amount and duration.”
The liabilities could pertain to anything from children’s needs ( education, higher education, marriage, even medical needs etc.) to own house, retirement living, trip, medical requirements and even lifestyle requirements similar as family vacations in case the primary breadwinner dies.
Besides, how much and for how long to take the term insurance will depend on carefully calculating the assets and liabilities at Different points of time in life for the whole family, with affectation and taxation also allow in practically.
Govila further said that the introductory tenet of this mathematics is that the family’s standard of living, including critical and lifestyle goals, shouldn’t suffer if a person dies.
Of course, it should be remembered that life insurance is neither a wealth creation tool nor a relatives planning tool for the family. It’s a sustenance tool for the interim so that the family can get back on its own after the family head’s death.