Does it Make sense For Senior Citizens To buy Term Insurance?

 Term insurance replaces the income lost due to the sudden demise of the bread-earner by offering financial aid to his family. This brings us to a thought-provoking question: “Does it make sense for senior citizens to buy term insurance?”

Well, mostly NO, however there are circumstances where buying life insurance by a senior citizen will make sense.  Remember buying a term insurance at this late age will require high premium. Also, age acts as a deterrent for companies who are not forthcoming in offering insurance. So, you must take the decision of buying a term insurance at this age prudently. Think it through.

There is a table at the end to help you exactly understand the financial implications of a term insurance at various age brackets.

Let’s see those scenarios closely wherein buying term insurance (irrespective of high premium) will be useful thereby weighing its pros and cons.

Scenario 1= Your kids are financially dependent on you

Term insurance is imperative if your kids are financially dependent on you. These days, this is a common scenario owing to late marriages and having kids late in life. By the time you cross 60, your kids are most probably still studying and financially dependent on you.

Scenario 2= You want your wife to be self-reliant

 If your wife depends on your pension and you don’t have provision of a family pension then buying term insurance will make sense. If there is no other source of income then to keep her self-reliant post your death, a term insurance is needed.

Scenario 3= You are working post retirement

You need a term plan if you are working post retirement owing to financial liabilities. It would give financial protection to the family by replacing your income after the death.

Scenario 4= You have liabilities and unpaid debts

Usually major loans, like home loan stretch till 50-60 years. However what about the money which you owe to a friend or relative? In that case, opting for a term insurance makes sense. If something untoward happens, proceedings of term insurance may be utilized to pay outstanding debts.

The purpose of term insurance is to ensure that your dependents are not left in the lurch after your death. But if you don’t have dependents or have a steady retirement income, you can go without a term cover. Similarly, individuals who are not working don’t need to opt for a term cover. 

Keep a Check on High Premium Rates

Buying term insurance at the ripe age is not an easy task. First, your age will make it difficult for you to find a good term insurance plan. Second, if you do find one, you would have to undergo stringent medical tests to prove you are fit for that plan.

Above all, premiums of term plans shoot up after you cross the 40 mark. (Refer to the table below.) For instance, a married man at the age of 60- year has to spend Rs 76,224 to seek Rs 1 crore life cover under HDFC ‘Click 2 Protect Plus’ plan of 15 years’ tenure. This term period is the maximum tenure given to a 60-year old person. However, a married man at the age of 50- year has to spend Rs 34,529 to seek Rs 1 crore life cover for the same plan. Similarly, premium rates of the same plan for 30- year and 40- year married men are Rs 7617 and Rs 13792, respectively.

So think before acting. Opt for a term plan only if it is unavoidable and no other option is left.

Source: http://www.policybazaar.com/life-insurance/term-insurance/articles/does-it-makes-sense-for-senior-citizens-to-buy-term-insurance/