Term Life Insurance for Seniors

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!

Read the whole article to find out what we told him about life insurance plans for senior citizens.

Friendly reminder: It’s easy to get lost comparing policies and premiums. Instead of spending hours on it, why not get personalized insurance advice from Ditto? We offer free consultations with zero spam! Just 30 minutes to clarify all your doubts. Book a call now!

Top Term Life Insurance Plans for Senior Citizens

Challenges Seniors Face When Buying Term Life Insurance Plans

Purchasing term life insurance in the twilight years of one’s life presents interesting challenges. A primary concern is the higher premium that comes with increased age. Insurance companies assess risk based on life expectancy; thus, older applicants often face steeper premiums due to the higher perceived risk.

Seniors also have a limited policy tenure. Many insurers cap the entry age for term policies, restricting the availability of longer-term coverage for older people. These factors can make it quite complicated for senior citizens to buy an affordable term insurance plan.

Eligibility & Age Limits for Term Life Insurance for Seniors

The eligibility criteria for term insurance vary among different insurers, but there are some general guidelines about term insurance age limits. The minimum entry age for term plans usually starts at 18 years. The maximum entry age range is 60 for most insurers, with HDFC Life, TATA AIA & Bajaj Allianz being an exception, at 65. However, do note that you may have to get a pre-approval before applying for these policies.

When it comes to the policy’s duration, term insurance plans offer maturity ages extending up to 85 years old, allowing seniors to have a term insurance plan well into their advanced years. But, at the end of the day, all of this depends on the insurer’s underwriting team and their process. This affects both answers – whether you can purchase a policy or not, and if you can, up to which age you can have the policy.

Factors to Consider when Choosing Term Life Insurance for Seniors

Here are some important factors to consider when purchasing a term insurance plan for seniors:

1. Health Check-ups: Many insurers mandate a medical examination if you’re over a certain age. The insurer will issue a policy only if you pass these tests, especially if you have pre-existing diseases.
2. Affordability: Given that premiums increase with age, you should choose a policy that provides adequate coverage without imposing financial strain. If the insurer mandates a health check-up, the premiums will primarily depend on this result. This is why comparing premiums across different insurers can help you find a cost-effective option.
3. Payout Options: Determine whether lump-sum or staggered payments best suit your family's needs. Some plans offer this flexibility, and you can use it to your advantage.
4. Cover Duration: Assess whether the policy’s duration is enough to cover the time when you will have the most financial obligations or your life expectancy. This is the most important factor when purchasing a term insurance policy.

That said, it’s worth noting that whole life insurance policies can provide coverage throughout your lifetime rather than ending after a set term. But is it worth it? We’ll now take a closer look at whole life insurance for seniors.

Term Life Insurance vs Whole Life insurance for Seniors

While the aforementioned factors help determine the right term insurance plan, some seniors might wonder whether whole life insurance is a better alternative. Let’s break down the key differences to help you make an informed decision.

As the name suggests, term insurance provides coverage for a fixed term. This is why term insurance is usually more affordable than a whole life insurance plan. However, it does not offer lifelong protection or maturity benefits, which is why many people prefer whole life insurance. 

Here are some differences between term and whole life insurance. Let’s take a look at it and break some myths regarding them.

Myths about Term and Whole-life Insurance

1. Myth: Whole Life Insurance is Always a Better Investment for seniorsWhile whole life insurance builds cash value, its returns are often lower than what you could earn by investing in other market-linked instruments. If your primary goal is wealth accumulation, there are other options that provide better growth.
2. Myth: Seniors Can't Get Term Life InsuranceWhile premiums do increase with age, many insurers offer term policies to seniors, sometimes even without a medical exam. The key is to compare plans and choose one that aligns with your financial situation.
3. Myth: Whole Life Insurance is the Only Option for Estate PlanningWhole life insurance is often marketed as an estate planning tool. But term life combined with smart investments can also help leave a good financial legacy. Estate planning strategies should be tailored to your specific needs, not just based on insurance type.
4. Myth: The Cash Value of Whole Life Insurance is a Good Source of Emergency FundsWhile whole life insurance accumulates cash value, withdrawing or borrowing from it reduces the death benefit. In this case, a simple FD might offer much more utility as an emergency fund than any life insurance policy.

Do Term Life Insurers Require a Medical Examination for Seniors?

Some policies offer a policy without any medical exam; however, these plans will most likely not be available for senior citizens and often come with higher premiums. On the other hand, policies that require medical examinations may offer a more favorable premium rate but can only be available for people who are healthy and without pre-existing diseases. 

So, your best case scenario will be to actually go for a medical test and get a more economical policy. Generally, the insurer will mandate a test for CBC, Lipid profile, HBA1C, and even a treadmill (which might be difficult for seniors).

Why Talk to Ditto for Your Health Insurance?

At Ditto, we’ve assisted over 3,00,000 customers with choosing the right insurance policy. Why customers like Tanmay below love us:

✅No-Spam & No Salesmen

✅Rated 4.9/5 on Google Reviews by 10,000+ happy customers

✅Backed by Zerodha

✅100% Free Consultation

You can book a FREE consultation. Slots are running out, so make sure you book a call now!

Conclusion

A term insurance plan is designed to replace the income in the event of your untimely death. And for seniors, a term plan may not be required if they have a solid retirement fund or investments that can sustain the family in the long term. However, a term insurance plan could benefit if they still have dependents and are earning an income.

Remember our client who was unsure whether his 63-year-old father should buy term insurance? After considering his father’s financial situation, future obligations, and available policy options, he realized that a term policy with a limited tenure and affordable premium was the right choice. He was able to secure coverage that aligned with his father’s needs without overpaying for unnecessary benefits.

But every situation is unique and therefore, it’s wise to note that insurance companies scrutinize senior citizens’ applications closely and charge high premiums. So if you’re still unsure, talk to one of our IRDAI-certified advisors today!