A term life insurance plan is one of the essential financial products you can use in today’s times. With the growing uncertainty of life due to the pandemic, increasing inflation and a rise in health problems, the need to financially secure your loved ones’ future are paramount.

A term insurance plan can offer you many advantages. Firstly, it offers financial protection to your family members in your absence. Secondly, it can offer you optional benefits, such as a terminal illness rider^#. Thirdly, you can claim tax^* exemptions on the premiums paid and lower your tax^* liabilities for a given financial year. The list goes on!

In addition to the advantages mentioned above, term plans also let you choose a premium payment term. Since everyone’s needs differ, insurance companies allow you to pick a premium amount and policy tenure as per your unique requirements. This increases flexibility and offers you more ease and convenience.
 

However, many financial experts recommend paying the term plan premium till the age of 60 only. Here’s why:

Why must you pay the term plan premium till the age of 60?

Paying the term plan premium till the age of 60 only can help you in many ways, such as:
 

1. You can pay it in your working years

Your working years are the best time to buy a term insurance plan. When you are young and earning, you can easily pay off your term plan premiums without any issues. The cost of insurance does not feel like a liability during your working years, as you can rely on your income to cover such costs.

Most people retire at 60 and have a limited pool of savings for the rest of their lives. So, if you continue paying the premium after the age of 60, you will have to rely on your savings to cater to these costs. This can be a burden on your shoulders and lead to a shortage of funds at a later stage in your life. 
 

2. You do not have to depend on others

Paying the premiums for term insurance at age 60 and beyond can be tricky. Retirement can bring with it a host of expenses, such as healthcare costs, long-term care costs, etc. Moreover, since you would not be earning an income from a job, it may be advised to reduce all your other expenses, like premium payments, loans instalments, etc.

If you carry these expenses into your retirement, you may end up being dependent on your children as it can be hard to cover all these costs on pension and savings.  
 

3. You can live a stress-free life

One of the main purposes of purchasing a term insurance plan is to live a stress-free life with peace of mind. However, if you continue to pay the term plan premium even after the age of 60, you will not be able to lead a peaceful retirement free from financial worries. You may constantly feel burdened by premium payments and may have to compromise on other goals to accommodate them.

Not only does this lead to frustrations, but it can also alter your standard of living. Constant stress and financial anxiety can impact your health too. Hence, it may be advised to use a term insurance calculator and plan a premium payment schedule that allows you to pay off all premiums before you cross the age of 60.

What are some things to consider when purchasing a term plan?
 

Apart from picking a suitable premium payment term that allows to you pay the premium till the age of 60, you must also look at the following aspects:
 

1. Buy term insurance when you are young:Although term plans can be bought at the maximum age of 65, it is better to purchase them when you are younger to enjoy lesser premiums. The cost of term life insurance at age 60 is a lot more than when you are 30. So, save money by purchasing term plans early in life.
   
   
2. Purchase a suitable policy tenure:The right policy tenure will depend on your needs. However, it should be long enough to benefit your loved ones. For instance, if you have children, make sure the tenure is long enough to cover your children till they are financially independent. Tata AIA also offers the option to extend the cover till the age of 100.
   
   
3. Pick suitable rider^#:If you wish to be fully protected, add suitable riders^# to your term plan. Riders^# may come at an additional cost, but they can help you in diverse situations. So, do not shy away from adding them to your policy.
   
   
4. Select a reputable insurer:Since term plans are a long-term commitment, it is important to select an insurance company that you can trust and rely on for your family’s future financial security.
   
   
5. Pay attention to hidden charges:The costs of term insurance can differ from one company to another. Opt for a plan that does not charge high policy administration fees, surrender charges, etc. Compare all charges and pick one that is the most cost-effective.

To sum it up

Term insurance can help a grieving family overcome the loss of losing a loved one and carry on with their dreams and desires. However, while these plans offer financial security to the nominee, they should not be a financial burden for the policyholder.
 

One way to ensure this is to use a term insurance calculator and plan a premium payment schedule that does not extend to your retired years. This will provide you with peace of mind, and you will be able to pay the premiums comfortably without them becoming a burden on you.
 

L&C/Advt/2023/Jan/0288