Term Plans have seen a sudden upsurge in popularity in recent times. Having said that, the idea of one size fits all, cannot be applied here.
The primary reason behind the increasing popularity of Term Plans can be credited to the fact that these have low premiums and provide life cover to the insured person at a marginal cost when compared to a full-fledged insurance policy. The low cost of these plans allow people to invest the difference amount and find the dual benefit of Insurance + Investment, along with complete flexibility.
With the advent of the Tech era, even insurance companies have gone digital. In order to cater to young, tech savvy professionals they have launched Online Term Insurance Plans, which has further led to a decrease in its price.
The question that arises here is that whether these plans are as beneficial for people close to their retirement, as it is for young professionals. In order to answer this question, firstly we need to look at the fact that the premiums will not be low for someone in their 50's as compared to a younger person applying for a term plan. This completely changes the idea of a person towards a term plan and the investment option available cannot be perceived in the same way. We need to understand that the risk associated with higher age is more as compared to someone in his 20s, hence the underwriting risk increases for the insurer as well, leading to higher premiums.
However, here's a list of situations wherein it might make financial sense to invest in a term plan inspite of the high premium, as the value is definite to surpass the costs:
• When your kids are financially dependent on you
• When you're the sole bread earner of the family
• If your wife is dependent on your pension
• If you have to work post retirement
• If you have any outstanding debts or loans
If any of the above scenarios are applicable to you, it might be a good idea to opt for a term plan even at an older age. You should compare it with other forms of insurances before arriving at a conclusion and choose the one that best suits your needs.
Life Insurance coverage is available in this product.