A couple of weeks ago, a term insurance client of ours approached an advisor with a question, “My dad wants to get a term insurance plan, but he is 63 years old. I don’t know if he should get a policy at all. Can you please help me out?”
Now, since we are more about insurance awareness and literacy and less about selling plans, he couldn’t have approached somebody better! We were glad to offer the help!
And here’s what we told him about life insurance plans for senior citizens!
Major Takeaway: Life insurance providers will offer you life insurance plans even after you turn 60. However, purchasing a life insurance plan might not be the smartest financial decision if you are in your senior years (60 years or above). Think of this: life insurance plans are supposed to act as your income replacement in the unfortunate event of your passing away, thereby helping your dependents reach their life-stage goals. But, once you have turned 60, you approach (or reach) your retirement years + your children don’t stay financially dependent + your premiums are extremely high.
Also, the sum assured received IS NOT A FINANCIAL LEGACY. You can do a much better job by opening a savings account/FD/RD, etc.
Life Insurance Plans for Senior Citizens (60+)
Ask your parents or your grandparents, and you will know that either or maybe both of them have a life insurance policy in place. Considering the offline marketing endeavours via physical agents, word of mouth, and the monopoly that LIC had, it isn’t surprising how life insurance plans remain one of the most popular financial products across the country.
Subsequently, life insurance providers catered to the evolving financial requirements (based on their age slab and investment and/or savings interests) by offering diversity across their product portfolio. Currently, there are a few common types of life insurance policies -
| Types of Life Insurance Plans | Premium Flexibility & Affordability | Risk Level | Investment Option | Recommended or Not |
|---|---|---|---|---|
| Term Plans | No risk | No | Recommended | |
| Whole Life | No risk | No | Not recommended (Less chances of dependents till you reach 99 years, so no need for a life cover). |
|
| ULIP | High risk | Yes | Not recommended (Combining protection and investment is never a good option. Returns are dependent on market fluctuations). | |
| Endowment | Low risk | Yes | Not recommended (higher premiums due to assured disbursal whether you survive the tenure or not). | |
| Retirement/Pension | Low risk | Yes | Not recommended (savings would be a better option). |
Heads Up: It takes an average person up to 5 hours to read & analyze a term life policy, and 10 hours or more to compare different plans and make a decision.
This is why we propose a better alternative - taking a 30-minute FREE consultation with Ditto’s certified advisors. We have a spam-free guarantee, and we’ll never push you to buy a plan. Don’t delay this - we have limited slots every day, so book a quick call here before they run out.
(Please note: The recommendation mentioned above is a carefully analysed decision by industry experts.)
Now, firstly, in the case of any of the life insurance plan types mentioned above, it is always advisable to purchase them when you are young, considering -
- Life insurance plans are supposed to act as income replacements in the event of your unfortunate passing away (although there are a few types of life insurance policies that offer maturity benefits if you survive the policy tenure).
- Life insurers offer lower premiums to young policyholders since they present as low-risk profiles with little to no chances of pre-existing medical conditions and, hence, low risks of death benefit payout. On the other hand, as policyholders too, you benefit from purchasing life insurance plans since the premiums are kept low (also, if you avail of term insurance plans, the premiums get locked in as per your purchase age, so you end up paying low premiums across the policy period).
However, what if you decide to make a late purchase, say while you are in your 60s? Can you avail of life insurance products by then? Should you invest in it? What are the pros and cons? Here’s a look at the answers to all these questions -
Can senior citizens purchase life insurance plans?
Answer: YES!
Irrespective of which life insurance product you choose, the insurer offers you plans even if you are 60+. However, whether you should buy a life insurance plan after you have turned 60+ is another question altogether.
Should you purchase a life insurance policy after you have turned 60?
Answer: NO!
There are a couple of reasons why, as per experts, you shouldn’t be purchasing a life insurance policy after you turn 60+ -
- High premiums: To an insurer, a potential policyholder who is 60 years or above is a risky profile - susceptible to pre-existing medical conditions and with low life expectancy. This spikes their death benefit payout risks, endangering the insurer’s financial health. Subsequently, life insurance providers demand a high premium, which often takes a toll on your savings.
- Closing retirement age: Life insurance plans are supposed to be your financial fail-safe in the event of your unfortunate absence by kicking in to ensure that your dependents are able to achieve either life-stage goals without any financial hiccups. However, since, as a 60+ individual, you are closing in on your retirement age, you soon won’t have an income to replace. Thus, to pay the high premiums, you will be digging into your life’s savings.
- Lowered number of dependents: Since the sum assured earned from life insurance policies is supposed to financially support your dependents, the number and age of your dependents play a significant role in calculating the ideal cover amount for your policy. However, considering that you are now 60+ years old, the chances are high that your children are now financially independent, thereby limiting the requirement of coverage that would financially fuel their life-stage goals. Also, it’s important that you remember that the sum assured availed from a life insurance plan is best not treated as a legacy to be left behind after you pass away because chances are high that you can take up other financial channels to do a better job at this. Now, coming to the question of your spouse, who might also be financially dependent on you, here’s what you can do -
- Better investment/savings channels: If you have reached 60 and, for whatever reason, don’t yet have a life insurance policy in place, it’s best if you go ahead with an alternate financial channel that would ensure financial security for your spouse and your children (even if they are not dependent any longer). You can invest the premium (that is required towards purchasing and maintaining a life insurance plan) into building savings accounts, Fixed Deposits, Recurring Deposits, etc. Additionally, if required, you can invest the amount in real estate ventures.
So, while you have life insurance providers offering your policies across genres of retirement plans, whole life insurance policies, etc., it’s best to first consider the caveats. After all, you are investing in a life insurance plan that requires premiums and builds up towards a corpus that is often worth crores.
Senior citizens and term insurance plans: A financial solution
Remember the client who had approached us for a term insurance plan for his father? Here’s what we had told him -
Not to cry over spilt milk, but life insurance plans are always a great financial ally to have, provided you are in your younger years. Moreover, among the genres of life insurance products, term insurance plans are the most recommended type.
Term insurance policies are affordable, straightforward, pure protection tools, and customisable as per your financial requirements, thanks to the term insurance riders in place. Now, it’s true that credible term insurance providers are stringent about their eligibility criteria and often take a look at the following factors before offering a term plan -
- Age
- Income slab
- Educational Qualification
- Lifestyle
- Habits (smoking)
- Pre-existing medical conditions
- Occupation, etc.
-however, since the insurers offer a substantial sum assured against a nominal premium, the binding eligibility criteria are well worth them. Additionally, say you have the optimum riders (Critical Illness, Waiver of Premium, Accidental Total and Permanent Disability, etc.); you land up with a product that is entirely worth every penny and offers a minimum premium as per your purchase age.
Now, with term insurance plans, we generally recommend that the ideal policy period be calculated based on your age, age & number of dependents, current financial obligations, and existing financial bandwidth. While this differs from one policyholder to the other, usually, the ideal policy period is when the term insurance plan offers coverage till you turn 65 to 70 years.
Based on such deductions, as a senior citizen, if you don’t have a term insurance plan in place, you shouldn’t purchase one now. It would be better if you -
- Take up savings using any alternate channels and educate your children about purchasing term insurance policies or
- Purchase a plan for them if they are yet to be financially independent. It will be considerably cheaper considering that they are young, disease-free, and present as a low-risk profile. They can start paying their premiums once they become financially stable.
Why Talk to Ditto for Your Term Life Insurance?
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Conclusion
The question isn’t about whether life insurance providers have a policy for you if you are a senior citizen; it’s primarily about whether you should at all purchase a life insurance plan as a senior citizen. And we say, don’t! It won’t be worth the spiked premiums you will be paying; hence, it's not a smart financial move.
