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Need assistance in choosing the right insurance plan? Get a call from our Expert.

Need assistance in choosing the right insurance plan?Get a call from our Expert.

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in. T&C apply.

Why Must You Pay the Term Plan Premium Till the Age of 60?

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
  2. 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. 
     

  3. You do not have to depend on others
  4. 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.  
     

  5. You can live a stress-free life
  6. 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.
 

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and they will be subject to Company’s underwriting and acceptance.
  •  For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility for tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.