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Term Insurance for Senior Citizens
It is often advised to buy term insurance as early as possible in life, ideally in your 20s or 30s. But that does not mean that you can't buy it after that age has passed. Even senior citizens who are aged above 60 can buy term life insurance to financially protect their loved one's future in case of their untimely demise. Do not miss out on insuring your family's life, assuming that you cannot buy or are not eligible to purchase term insurance as a senior citizen. ...Read More
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You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.
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Why is Term Insurance Important for Senior Citizens?
Table of Content
1. Features of Term Life Insurance for Senior Citizens
2. Benefits of Term Insurance for Senior Citizens
3. How to Choose the Best Term Insurance for Seniors Citizens?
4. Eligibility Criteria for Term Insurance for Senior Citizens
5. Coverage Options in Term Insurance for Senior Citizens
6. Riders Benefits Available With Term Insurance for Senior Citizens
7. Things to Consider When Buying Term Insurance for Seniors Citizens
8. Constraints of Term Life Insurance for Senior Citizens
9. Why You Should Buy Term Insurance Without Delay
10. Summary
Term insurance is a suitable insurance option for not just youngsters but also senior citizens. What is term insurance It is a simple life insurance policy that provides coverage for a specific period at affordable premiums. Once you become a senior citizen, the fear of leaving your loved one's financial future in jeopardy can give you sleepless nights. That is why buying term insurance is important for senior citizens, too.
Money Protection
Flexible Payment Choices
Whole Life Cover
Replacing Lost Income
After the age of 60 years, even if you have retired, it is crucial to financially secure your family's future with adequate cover that acts as money protection. This amount would ensure that your family's daily expenses, debt obligations, and investments can go on and that the set life goals are achieved in a timely manner, such as in the case of a child's marriage.
Another key aspect to consider when thinking about the importance of term insurance for senior citizens is the flexibility in payment options. The cover that your nominees will get can either be as a regular income, as a lump sum, or even a combination of both.
Term insurance policies for senior citizens also come with the option of whole life cover, which takes away the stress of purchasing new insurance or renewing the current one after a certain age, like 80 years. Nowadays, many term insurance plans offer coverage up to the age of 100 years.
Another reason why term insurance is important for senior citizens is that if they still have an income source and dependents, the policy's cover amount can act as replacement income for the nominees if they, unfortunately, die.
Features of Term Life Insurance for Senior Citizens
1. Age Limit:
Most life insurers in India have an age bracket of 18 to 65 years for buying term life insurance, with the upper limit extending to 80 to 85 years in some cases. This shows that it is possible to buy term insurance for senior citizens, too, if they wish to secure their family's financial future in the unfortunate event of their death.
2. Death Benefit:
As term insurance plans are like pure protection policies, the insurer would pay the sum assured to nominees in the event of your, i.e. the senior citizen's demise. This payout at the time of your unfortunate demise is done directly to your nominees.
3. Premium Payable:
For any term insurance plan, the policy remains effective only till maturity, provided you keep paying the premiums timely. Although term plans have affordable premiums, especially for younger age groups, the premium can usually go higher for senior citizens. You can use an online term insurance premium calculator to get an estimate of their expected premium amount.
4. Medical Test:
Term insurance for senior citizens would mostly require you to go through a medical test. This is done to make sure any pre-existing medical condition, such as diabetes, is known to the insurance company before the policy purchase. Your premium amount is affected by such medical conditions.
5. Extra Coverage Options Available:
Term insurance plans also sometimes offer extra coverage through add-on riders like accidental death benefits, terminal illness cover, waiver of future premiums, etc. Note that such add-on covers are not compulsory but can be taken to enhance your overall coverage.
Benefits of Term Insurance for Senior Citizens
Safety for Your Family
Financial Independence
Achieve Your Money Goals
Clear Your Debts and Obligations
Create a Legacy
Improving Life Insurance Coverage
Tax Saving Benefits
Senior citizens who buy term insurance can have a peaceful mind, knowing that they have provided financial safety to their family in case of their unfortunate demise. The assured sum shall be given to your nominees in such scenarios, which would prevent your family's financial future from getting jeopardized.
In the case of TROP (term plan with return of premium), the maturity amount’s payout can act as post-retirement income, which thus provides financial independence and stability to senior citizens.
Term insurance for senior citizens can help your nominees (loved ones/family) in achieving money goals, such as a child's higher education fees or wedding costs, through the payout amount.
The term insurance’s cover would greatly help your nominees in handling existing debt obligations such as loan EMIs, credit card debt, etc. In the absence of a term plan, your family can be overburdened with all such liabilities.
Buying term insurance for senior citizens can help you create a legacy for your future generations in case of your unfortunate demise. Policies such as whole life insurance can ensure the passing of financial benefit to your family upon your demise, even if it is at the age of 90 or 100.
Add-on riders like critical illness, disability, waiver of premium, etc., can help senior citizens enhance the overall coverage of their term insurance plan.
Keep in mind that the premium you pay towards term life insurance is eligible to be claimed as an income tax deduction of up to Rs 1.5 lakh per year under Section 80C.
How to Choose the Best Term Insurance for Seniors Citizens?
After understanding the importance and benefits of term insurance plans for senior citizens, it is equally crucial to know how to choose the right policy:
1. Pick the Right Coverage
Firstly, know how much coverage you need to adequately insure your family's financial future. Senior citizens need to factor in the future financial requirements of their spouse and, children, and other dependents, if any. From the monthly groceries and existing EMIs to the inflation rate, a lot of factors are considered when picking the suitable cover amount, which is usually advisable to be at least 10 times your annual income.
2. Think About Extra Coverage Options
When finalizing any term insurance for senior citizens, factor in the options to enhance your overall coverage through add-on riders like term illness payout, return of premium, etc.
3. Consider Claim Settlement Ratio
When choosing a term insurance plan for senior citizens, a Claim Settlement Ratio or CSR is essential. CSR is the percentage of claims an insurer has settled compared to the number of claims received during a year. A higher CSR, preferably above 95%, indicates that the insurer is credible and has a long history of honouring its claims, suggesting that the nominee receives the assured sum without any hassle in case of an unfortunate event. Moreover, the CSR held by an insurer can be checked by going through the annual report released by the IRDAI to ensure the selection of a genuine provider in critical times.
Eligibility Criteria for Term Insurance for Senior Citizens
Following are some of the key eligibility criteria for term insurance for senior citizens that you must know for a smooth purchasing of the required plan:
Age
Citizenship
Medical Test
Term life insurance for senior citizens comprises significant age criteria laid down by insurers. In most cases, it generally grants term plans to individuals in the age range of 60 or 65 years . Nonetheless, the maximum age varies, generally from 99 or even 100 years old , depending on the policy. Since the premium increases with increasing age, insurers assume higher risks for older people.
Certain companies also provide special plans for seniors with some degree of flexibility on entry age limits. Thus, it is crucial to check the age restrictions before applying for the policy to ensure eligibility and adequate coverage for financial security in later years.
In India, term insurance plans for senior citizens are typically issued to Indian residents. Non-resident Indians (NRIs) may also be eligible, but they have to provide adequate documents, including proof of Indian citizenship, passport details, and proof of residency abroad. Some insurers may impose further conditions for NRIs, such as medical tests at designated hospitals.
Foreign citizens typically may not qualify unless they have Overseas Citizen of India (OCI) or Person of Indian Origin (PIO) status. Hence, the eligibility criteria regarding the insurer ensure that there are no complications while applying for a term insurance plan.
Most insurance companies must conduct medical tests before suggesting a term plan for senior citizens. These tests typically include blood sugar levels, cholesterol, ECG, blood pressure, and other age-related risks. The results help insurers determine the premium amount and coverage.
Some insurers offer a no-medical-test policy, but such plans come with higher costs and limited coverage. In case of an applicant's pre-existing condition, the insurance company might assign a waiting period or an exclusion clause covering it. It is advisable to undergo medical tests to secure better coverage and avoid claim disputes in the future.
Coverage Options in Term Insurance for Senior Citizens
When you think of purchasing a term insurance plan for senior citizens, there are a few criteria related to coverage options that must be considered; they are discussed as follows:
Endless Coverage
Return of Premium Coverage
Extra Coverage Through Riders
Endless coverage, also called whole-life term insurance, is a kind of insurance that covers seniors for life rather than a specified term. Unlike traditional term plans that expire at a specific age, these policies provide lifelong protection, ensuring that beneficiaries receive the sum assured whenever the policyholder passes away.
This is very beneficial, especially for people who want to leave some financial security for dependents. The only downside is that premium costs for such plans are enormous compared to regular term insurance owing to the life span of protection. Senior citizens would have to consider their financial standing before they choose such coverage.
Return-of-premium (ROP) coverage provides that the policyholder shall receive the total premium equated to the policy term time if they outlive the policy term. While traditional term plans for senior citizens offer only death benefits, return-of-premium plans tend to eliminate "loss" of premiums, thus attracting elderly clients who require their invested amounts to be protected under any circumstance.
However, ROP term insurance generally has higher premium rates than the standard term insurance plan. It is ideal for seniors seeking a balance between risk coverage and financial returns, ensuring their investment is not entirely lost.
Riders provide added benefits to a term insurance plan covering other risks. For example, senior citizens are often offered optional riders such as critical illness, accidental death benefits, and the waiver of premium upon disability. These additions provide better security for the policyholder since they cover emergencies that may lead to a pile of medical expenses and/or the death of the insured in an unfortunate accident.
So, for example, a critical illness rider pays its insured a lump sum upon diagnosis of cancer or heart attack. While riders increase the policy’s premium, they offer valuable protection tailored to the unique needs of senior citizens, making term insurance more comprehensive and beneficial.
Riders Benefits Available With Term Insurance for Senior Citizens
Given that having add-on riders can enhance your overall term insurance coverage, here’s a list of rider benefits often offered by insurers:
Accidental Death Coverage
Benefits for Terminal Illness
Total Permanent Disability from Accidents
Critical Illness Benefits
Premium Waiver Benefits
This add-on rider provides an added amount on top of your policy's base sum upon the unfortunate accidental death of the senior citizen during the policy's term.
If you get diagnosed with a terminal illness, the insurance company may either start paying a part of your cover or even pay the entire cover amount to assist you in taking care of the high medical bills.
This rider ensures that an additional amount gets paid to you in case the senior citizen gets affected by an accidental total permanent disability during the insurance policy’s term.
If the policyholder gets diagnosed with a critical illness like cancer, it gets covered under the plan of term insurance for senior citizens. In this case, the insurer would pay the added sum assured to assist you in covering the illness’ treatment costs.
Another add-on rider often offered by insurers is the waiver of all future premiums in case the senior citizen gets diagnosed with a critical illness or accidental permanent disability.
Things to Consider When Buying Term Insurance for Seniors Citizens
1. Assess Your Needs
Be clear as to why you need the term insurance. Do you want financial safety for your family, or just leave them some money for inheritance? Knowing the aim would help you choose the right term insurance.
2. Review Coverage Choices
Ensure you do enough research and then compare various types of term insurance policies being offered by insurers. Understand the benefits, features, and drawbacks of each policy to make an informed decision and maximize the term insurance benefits that best suit your needs.
3. Consider Affordability
Do not miss out on assessing your affordability when selecting an insurer and a policy. Go ahead with a term insurance plan whose premium you are comfortable paying without stressing your finances too much.
4. Check for Medical Needs
Some term insurance plans for senior citizens require them to go through a medical examination to assess their pre-existing diseases, if any. They would also need to provide a medical history and disclose any medical condition to the insurer. Remember that some insurers may not take any such examination, but they may also have higher premiums.
5. Look Into Insurance Companies
Ensure you opt for a reputed insurer, especially if they specialize in term insurance for senior citizens. The insurer's claim settlement ratio, financial stability, range of products, etc, are all important factors to consider.
6. Check the Policy Rules and Details
Do not miss out on the minute details. Carefully review all the term insurance policy documents, terms and conditions. Aspects like premium payment terms, add-on riders, coverage limitations, and exclusions should not be ignored.
7. Compare Quotes
Try to get quotes from various insurers on the basis of premium cost, policy features, reputation, coverage amount, etc. Amongst them, you can compare and choose the suitable one.
Constraints of Term Life Insurance for Senior Citizens
Apart from the benefits, you must have an idea of a few constraints of term life insurance for senior citizens. They are discussed in detail below:
Age Limits
No Cash Value
Term life insurance has strict age limits, making it difficult for senior citizens to obtain coverage. Most insurance providers have a maximum entry age between 60 and 75 years. After this, applying for a new term plan becomes very difficult, and renewals may also be restricted. Even if it is available, the term of the policy is shortened and usually expires at about 80 - 85 years.
Hence, it is less probable that an older adult can acquire long-term coverage, leaving their families financially vulnerable. Next, insurance premiums keep increasing with age, making it highly costly. Seniors must begin early and look into policies that increase age limits for extended financial security.
Unlike whole life insurance or investment-linked policies, term life insurance does not accumulate cash value over time. This means policyholders cannot withdraw funds, take loans against the policy, or receive any maturity benefits. Once the policy term ends or if premiums are not paid, the coverage ceases without any financial return.
This can be a drawback for senior citizens, who prefer policies that offer savings or investment components. Those seeking financial security beyond death benefits may need to explore other insurance products, such as whole life plans or annuities, for added value.
Why You Should Buy Term Insurance Without Delay
Benefits and features such as affordable premiums, flexible payouts, add-on riders, and income tax benefits make term insurance for senior citizens a great option. If you are a senior citizen planning to secure your family’s future financially, buying a term insurance plan without any further delay can be useful. Not only will your loved ones’ financial future be secured, but you too can live with a peaceful mind, knowing your family will not be financially burdened in your unfortunate absence.
Summary
Suppose you have not bought term insurance yet, even after becoming a senior citizen, and note that it's never too late. You can still buy term insurance from a reputable insurer whose policy features, premiums, add-on riders, payout options, etc, suit your financial situation and goals. With a term insurance plan, your family's financial future will be secured in case of your unfortunate demise.
FAQs on Term Insurance for Senior Citizens
Q: What is the maximum age to purchase term insurance for senior citizens?
Many life insurance providers in India have an age bracket of 18 to 65 years for buying term life insurance, with the upper limit extending to 80 to 85 years in some cases.
Q: Can a senior citizen purchase a term insurance plan?
Yes. Many life insurers allow senior citizens aged 60-85 years to buy term insurance to secure their family's financial future.
Q: What are some key factors that can impact the term insurance premium for senior citizens?
Your current age and medical tests can impact your premium amount to a great extent. Having pre-existing medical conditions like diabetes can lead to higher premium costs, as the risk of securing your life can be higher for insurers.
Q: Can senior citizens cancel their Term Insurance policy?
Yes, senior citizens can cancel their term life insurance at any time. They need to submit a written request to the insurance company regarding the same.
The insured are allowed a 30-day free look period to review their currently purchased policy's terms and conditions and cancel the policy if they find it unacceptable.
Q: Is there a waiting period for Senior Citizen Term Insurance policies?
The waiting period varies across different insurers and policies. The waiting period for senior citizens can go up to 1-3 years, especially for pre-existing medical conditions.
Q. Why are senior citizen term plans usually more expensive than term plans purchased by younger individuals?
Senior citizen term plans are costlier because older individuals pose a higher risk to insurers due to increased health issues and shorter life expectancy. Premiums rise with age because there is a higher likelihood of claims being made. Insurance companies charge senior applicants a higher premium to cover this risk.
Q. Do senior citizen term plans offer a regular income payout option?
Yes, many senior citizen term plans offer a regular income payout option. This means that instead of a lump sum, beneficiaries are provided monthly or yearly instalments that will help them manage their finances better. Such an option favours dependents who want regular income over a one-time settlement to plan financially.
Q. Can I pay the term insurance premium online?
Yes, premiums can be paid online through the website of the insurer, its mobile applications, or third-party payment platforms. Online payments facilitate instantaneously confirmed options and other features, such as net banking, credit or debit cards, and UPI payments, thus ensuring timely premium payments and no break in policy coverage.
Related Article
- Features of Term Insurance: Affordable, Flexible and Secure
- What is Term Insurance? Definition & Meaning of Term Plan | HDFC Life
- Term Insurance for Parents: Affordable Coverage and Benefits
- Buy Best Term Insurance for Self Employed in India 2024| HDFC life
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
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Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
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