Retirement years are the golden years of your and your partner’s lives. After working hard all your life, it’s only fair that you get to slow down and reap the benefits. However, retirement cannot mean that you entirely stop thinking about and planning for your finances. Certain long-term care investments, such as term insurance, should still be considered. The benefits of a term insurance plan will help ensure that you can financially look out for your loved ones right till the end.
What is term insurance, and why do I need it?
A term insurance plan is a type of life insurance policy. It provides a life cover for a specific period for the policyholder in return for one-time or regular premium payments. In the event of the policyholder’s demise, a term insurance plan pays out the entire sum assured in a lump sum to the nominee.
Term plans are called pure protection plans because they are far-sighted and designed to financially look out for your family so that no financial liability falls onto their shoulders in case of your demise.
As a retired person, you may not have many dependents. However, even if you have one person who depends on you financially, whether your spouse, grandchildren, adult children, siblings, or parents, you should seriously consider getting a term plan. Once thought through wisely, term plans can work well as an income replacement plan.
Let’s discuss all the benefits of a term insurance plan for retirement, and you can see for yourself why it is important and how to make the most of it.
What are the benefits of a term insurance plan?
It’s not uncommon to be servicing debt even as a retired person. The amount of debt and liabilities remaining after a policyholder’s demise can be taken care of with term insurance. This is essential because, otherwise, the debt burden may fall on your retired spouse. Or it may fall on your children, who may be focusing on building their lives and already have financial stressors.
Even if you have paid off all your debt, like your home loan, it may be possible that you may have to take on new debts as a retiree. This often happens due to medical bills. The need for medical care and treatment shoots up with age, and the need for in-house assistance may also arise. Again, you may not like the idea of relying completely on your children. For tackling financial difficulties in such a scenario, term insurance comes in handy.
Financial stability for dependents
As someone in their 60s, it’s highly possible that you still have several dependents other than your spouse. If you started a family at a later stage in life, your children may still be in their early 20s and not yet financially independent. You may also have elderly parents or in-laws to look after.
Whether the number of dependents is high or as low as one, the benefits of a term insurance plan are the ones you should have on your side. You don’t want to leave a single loved one who still financially relies on you to have to struggle after you’re gone.
Lesser premium and simplicity
As mentioned earlier, a term insurance plan is a pure protection plan. This means it only offers a payout in the case of the policyholder’s demise. It offers no survival benefit. Hence, once the policy has expired, there is no maturity amount disbursed.
Hence, a term plan is value for money when you analyze the premium you need to pay versus the benefits of the term insurance plan you get to reap. It is also a very simple and straightforward type of insurance plan with not too many technicalities. It is a very less-risk investment with direct benefits. It is understandable that as a retired person with a limited retirement corpus, you don’t want to experiment or invest in more-risk products at this point.
Income replacement plan
Traditionally, term insurance policies only provided a death benefit. However, now you can opt for the Life Income option when you opt for Tata AIA Life Insurance term plan. With the life income option, the policyholder receives income payouts during the policy period regularly after the age of 55, 60, or 65, as per their preference.
This makes term insurance plans a great income replacement option during your retirement. With the life income option, you get the traditional protection benefit - payout in case of demise - as well as an income benefit as you grow older and lead a peaceful life.
Are there any additional benefits of term plans?
Yes, in addition to the primary benefits discussed, there are some other pluses of term plans.
Limited pay term
Another major benefit of term insurance is its limited pay term on premium. You can opt to pay the premium for a specified period. However, the policy’s coverage will continue on a whole-life cover basis if you choose that option.
Timely claim settlements
As a term insurance plan for retirement is quite straightforward, the claim payouts are too. The claim is paid in a lump sum to the nominee, and typically, a plan will immediately payout once all formalities are taken care of.
Aids in funeral costs
Funeral costs are the last thing a family wants to worry about when they have lost someone. The money from the term insurance plan can help settle the costs incurred during the funeral.
What is the maximum age limit for term insurance?
If you are wondering, ‘Can a retired person take term insurance?’ or ‘What is the maximum age limit for term insurance?’, we understand why. Typically, it’s difficult to be eligible for any kind of life insurance as a retired individual. But there are some term plans that you will be eligible for and will still offer you a good deal.
Tata AIA Life Insurance offers term insurance plans where individuals up to the age of 65 are eligible. So, you can rest assured that it’s not too late for you to seek the benefits of a term insurance plan.