Term insurance is often one of the most effective and affordable ways to secure financial protection for your loved ones. However, not everyone can be eligible to purchase a term insurance plan. An important factor that determines whether you can avail of a good term insurance plan, is your age. The younger you are when you buy a policy, the lower your premiums are, and the longer the coverage duration of the plan is. Conversely, waiting too long means you will have to pay significantly higher premiums and restricted options.
So, in this article, let’s take a look at how your age affects your premiums and policy eligibility.
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Minimum and Maximum Entry Age for Term Insurance
Most insurers impose minimum and maximum entry age on their term insurance policies. This ensures that policyholders meet eligibility criteria while balancing risk for the insurance company. Usually, the minimum entry age for term insurance is 18 years, which means you must be an adult to purchase a policy.
On the other end, most term policies have a maximum entry age of 60, with some extending this up to 65 years. This means people beyond this age bracket will not be able to purchase a term insurance plan. This restriction is because, with the rising age, the risk of faster payouts increases substantially, and thus, insurers are less willing to offer coverage.
Maturity Age in Term Insurance
While insurers limit the age at which you can purchase term insurance, they also impose a maximum maturity age, which is the age at which the policy expires. Most term insurance policies have a maximum tenure that covers you up to 85 years, but whole-life plans extend coverage up to even 99 years.
Suppose you opt for coverage until 99 years with a whole-life term plan – where the policy continues until the policyholder’s passing, rather than a fixed term – this may not be the best choice for everyone. This is because choosing a life insurance plan with a higher maturity age can have more drawbacks than benefits:
- Premiums will increase exorbitantly: As the name suggests, whole life insurance covers you till 99 years. And as you age, the chance of death increases. Due to this, insurers charge a much higher premium, making these plans unaffordable for many.
- The value of your cover amount will reduce drastically: Over time, the real value of your cover amount reduces due to inflation. While a ₹1 crore term insurance plan may seem sufficient now, it may not hold the same purchasing power 20-30 years down the line.
Experts say choosing a plan with a high cover amount and a slightly shorter duration (if need be) is better. This is because most people need high coverage during the initial years when their family is dependent on them the most.
How Age Affects Term Insurance Premiums
The age at which you buy term insurance significantly impacts the premium amount. Insurance companies assess risk based on life expectancy, and younger people are generally seen as lower risk, which naturally leads to lower premiums. To get a better understanding, let’s take a look at the approximate premium amounts of some term insurance plans:
| Rs. 1 crore cover for Male, non-smoker, salaried, till age 65 | Average premium across 5 popular insurers |
|---|---|
| Age: 25 | ₹10,564 |
| Age: 30 | ₹13,020 |
| Age: 35 | ₹16,295 |
| Age: 40 | ₹20,836 |
| Age: 45 | ₹29,260 |
As you can see, these numbers indicate that delaying your term insurance purchase leads to significantly higher costs over time. The earlier you buy, the lower your premium is. Apart from this, insurers also increase premiums by 5-10% every year due to inflation. While this doesn’t affect existing policyholders, it will increase the premiums for new policyholders.
Can You Get Term Insurance After 65?
Term plans are generally not available for people over the age of 65, as most insurers set the entry age barrier between 60 and 65. While whole life insurance plans may still be an option, they come with significantly higher premiums, and we do not recommend this because of their complexity.
Best Term Insurance Plans Based on Age Group
Age Group: 18-65 years
| Best Term Insurance Plans in India (if you’re under 65) | Features | Drawbacks |
|---|---|---|
| Max Life Smart Term Plan Plus | Critical Illness benefits Total and Permanent Disability rider Zero Cost (Special Exit option) Waiver of Premium |
No top-up option No option to boost your cover as per the inflation rate |
| HDFC Life Click2Protect Super | Critical Illness Benefit Total Permanent Disability Benefit Zero Cost Option Waiver of Premium Inflation Protection Accidental Death Benefit |
Pricier than the other plans in its category |
| Bajaj Life eTouch II | Return of Premium Terminal illness Accidental Death Benefit Rider Inbuilt Waiver of Premium on ATPD Zero Cost (Early Exit option) |
No waiver of premium if you’re diagnosed with a critical illness |
| ICICI Prudential iProtect Smart | Smart Exit Benefit Accelerated Critical Illness Benefit Inbuilt Waiver of premium on Accidental Disability Terminal Illness Life stage Benefit |
Needs an enhancement of their operational proficiency |
| Tata AIA Sampoorna Raksha Promise | Waiver of Premium Accidental Death Benefit Critical Illness Rider Total and Permanent Disability Rider Hospi Care Benefit |
No Zero Cost available (In Non ROP variant) |
Age Group: Over 65 years
If you’re over 65 years old, you will not be eligible to purchase a term insurance plan. We would not recommend you purchase another type of life insurance plan because they do not offer lucrative returns compared to the premium you will be paying.
Factors to Consider When Choosing a Term Plan Based on Age
- Policy Tenure: A young policyholder may opt for a 40-year term, while an older applicant may only qualify for 15-20 years. When you buy a policy when you’re young, you not only get extensive coverage but also lower premiums.
- Cover Amount: As people grow old, most people’s financial burden reduces – they will have paid off their housing and vehicle loans, their children will have grown up, etc, significantly reducing their financial burden. Your coverage should align with your financial liabilities, ensuring your dependents always have adequate financial security.
- Medical Screening: Older people often face medical screenings and higher premiums, making early purchases advantageous. If you do not pass the medical screening, naturally, the insurer will not issue your policy, leaving you and your family financially vulnerable.
Riders Based on Age Bracket in Term Insurance Plans
Term insurance policies may just be vanilla plans offering pure financial protection, but you can always customise them with a diverse set of riders. These riders include - Critical Illness, Waiver of Premium, Return of Premium, Increasing Cover, Decreasing Cover, Terminal Illness, Personal Accident, etc.
Apart from this, as we grow older, insurers are reluctant to give these riders. For instance, the maximum cover amount for critical illnesses you get decreases as your age increases. A 40-45-year-old person may be eligible to get only ₹ 5-10L worth of critical illness coverage at a high premium, but a 25-year-old can get ₹ 20-30L of critical illness coverage at relatively affordable premiums.
Conclusion
When you purchase a term insurance plan, insurers consider several factors such as your age, income, location, medical history, etc. And age is a significant contributor that determines your premium. The best age to buy term insurance is as early as possible, ideally in your 20s or early 30s. This ensures you have low premiums, longer coverage, and financial security for your dependents at the lowest possible cost. Buying term insurance is still a good decision if you're in your 40s or 50s, but you will have higher premiums.
The right term insurance policy depends on your financial responsibilities, age, health condition, and future goals. You can get affordable, long-term protection for yourself and your loved ones by purchasing a policy at the right time. And if you need advice on which term plan to purchase, feel free to book a call with one of our advisors.
