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6 Tips to find a Term Insurance Plan for Senior Citizens

dateKnowledge Centre Team dateMarch 02, 2021 views223 Views
6 Tips to find a Term Insurance Plan for Senior Citizens

Middle-class senior citizens usually have a relatively financially comfortable retirement. Having invested in retirement plans or saving schemes during the peak earning periods of their life, senior citizens often find themselves with a lot of money that they are not sure what to do with. Is it better to invest in more life insurance plans? Or a few fixed deposits in their children's or grandchildren's name?

Considering how responsibilities increase with age, with more people depending on you than before, it is paramount that the investments you choose are less risky. There are a myriad of choices out there, and the decision is made hard by the possibility of impending death. Let us look at a few tips to consider while finding the best term insurance plan for senior citizens.

1. Plan ahead with hybrid schemes

These days, investors who can plan can go for hybrid plans that combine the advantages of a life insurance plan with a savings scheme. The Invest 4G Plan offered by Canara HSBC Oriental Bank of Commerce Life Insurance, for instance, helps its policyholders secure a retirement income while securing your life with insurance coverage in case you die an untimely death. This is a great plan to go for at any age and is the best term plan for people who can plan decades.

2. Consider buying health insurance

Did you know that an average senior citizen has to pay around Rs 30,000 as a premium each year if they have a health insurance policy? This is because the older you are, the higher the risk factor is for the bank, which leads to them increasing the premium amount. How much you pay each year has a lot to do with your health during the transparency medical checkup as well as the policy benefits.

3. Assess your health before the purchase

It is advised that before you invest in a health plan, you spend some time assessing your annual medical bills and how much healthcare costs you may incur. If you are relatively healthy, you can avoid extremely expensive health insurance. But if you have underlying health issues like cancer or heart disease - considering how there is a fatal heart attack in India every 33 seconds and how in places like Delhi, the air pollution severely affects its residents' overall health, you may want to double-check your current health.

But the fact remains that with age, there is a chance of you developing more disorders and health conditions that may require pricey medical care. To avoid eating into your retirement savings, you can invest in a suitable health insurance plan that can provide financial cover during your health emergencies without making a dent in your accrued savings. Some insurance schemes even have regular health checkups that can help you avoid surprises regarding your health.

4. Consider low-risk investment alternatives

There are several low-risk investment options available to Indian citizens, including term life insurance, senior citizen saving schemes, fixed deposits, national savings certificates, etc.

a. Senior Citizen Saving Scheme

  • It was created specifically for Indian citizens who have crossed the age of sixty.
  • Accounts under the senior citizen saving scheme can be opened at post offices or banks that provide this product.
  • The maximum amount to be deposited is Rs. 15 Lakhs over a typical term policy period of five years.
  • One benefit this plan has is that if you reach the maturity age fully healthy, you can always extend it to an additional three years.
  • This is an excellent instrument to save taxes and gain returns on the investments once you are old.
  • The policyholder will be able to avail tax benefits under section 80C of the Income Tax Act, 1961
  • Tax does not cover interest earned on the investment.

b. National Saving Certificate

  • Just like the SCSS, the National Saving Certificate account can be opened at any post office by anyone.
  • Extremely low-risk investment
  • Tenure can last up to five years.
  • Annual compound interests are handed over to the policyholder when they receive the principal amount on maturity of the policy.
  • There is no cap on the principle amount, allowing you to save as much as you need.
  • Tax benefits are available the same way for the SCSS, under Section 80C of the Income Tax Act.
  • Deductions are available every year when the interest amount gets reinvested.
  • Only the final payout can be taxed among all the components in this scheme.

c. Fixed Deposits in Banks

  • It is guaranteed to give you steady returns at low risk.
  • You can make fixed deposit accounts across different banks with varied rates of interest.
  • Some banks offer higher interest rates for senior citizens compared to other investors.
  • Bank fixed deposits that have tenures of around five years are eligible for tax benefits.
  • Interest income earned up to Rs. 50,000 is exempt from taxes if you are a senior citizen.

5. Choose a term policy with enhanced protection

When most of your insurance plans and retirement savings schemes are paying off at the twilight of your life, and you are receiving large amounts of returns on your investment, the best option may be to choose a really good term life insurance instead of investing in multiple ones. It may even get hard to keep track of without external financial assistance, and the last thing you need in your old age is extra stress.

The best term insurance plan for you would be to act as both life insurance and as a savings scheme. Canara HSBC Oriental Bank of Commerce Life Insurance offers the iSelect Star Term Plan, which offers a whole life cover option, an increase in life cover depending on what stage of life you are in, a return of premium and in-built protection, the option to pay the premium in different ways that are convenient to you, as well as tax benefits.

Here are a few more tips to look out for when you are browsing through different plans to discern which the best term plan is for you:

  • Long-term protection

    It should provide long term financial security, at least up to 80 years of age. Some plans take this one step further and offer 99 years of coverage, which is a great choice.

  • Spousal coverage

    Try to choose one where you can cover your spouse as a part of the term policy. This way, both of you will have a safe cushioning in case there is a financial misfortune.

  • Accident cover

    Ensure your plan covers accidental death. If there are financial challenges due to sudden disability or accidental death, your family should not bear the brunt of it. Ensure that there is a way for your family to claim benefits in the face of such an unfortunate incident.

  • Flexibility

    Ensure that your plan is flexible with age. The iSelect Star Term Plan, for instance, provides a 25% increase in coverage every five years, depending on your aging requirements. If you go for the flexible aging coverage option, you will be liable to receive 100% more than the original option you took in the beginning.

  • Tax benefits

    Your plan should provide you with tax benefits. The best term insurance plan not only gives you lifetime coverage and security but also allows you to get back extra money in the form of tax deductions. When you have reached an age where every penny counts, these can have a bigger impact on your bank account than you think.

  • Monthly income

    Choose one with an option where your family will get a monthly income in the event of your untimely demise - the security of your dependents comes above everything else. If you are the primary breadwinner, even after you have passed your retirement age, a plan where your family will be paid fixed monthly installments can secure their future and give them a headstart in saving on their own.

  • Critical illness cover

    Ensure the plan protects against critical illnesses like a heart attack or kidney failure and terminal illnesses like cancer. Some term insurances offer additional payouts in situations like that.

6. Determine your term insurance plan duration

The period for which your family will be financially protected and receive a payment in case you die is called the term of the policy. The duration of your term policy depends on several factors, including the condition of your health, whether or not you have achieved your financial goals, etc., depending on which you can choose not to opt for the maximum duration. Consider the following before you make your investment decision:

  • Liabilities: Financial liabilities like loans, debts, children's education and health, parents are living with you, etc. Depending on how long your loan period is, increase the period of your term policy too.
  • Dependents: If you are the sole breadwinner of your family, consider buying a longer duration.
  • Your age: While it is always advisable to buy term insurance at a young age for a longer duration, ask your peers the duration of their term insurance plans to decide the ideal duration depending on your health conditions.

Double-check and triple-check your decisions regarding making investments after the age of sixty, and you can safeguard your family's future and enjoy a peaceful retirement life.

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to Ask while Buying a Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
  9. 9. Does the term insurance plan have a cash value if you decide to cancel the policy?
  10. 10. Under what circumstances can a term insurance plan be cancelled?
  11. 11. Can I pay the premiums online or make electronic payments?
  12. 12. What will happen to the term plan if the life assured starts smoking after purchasing the policy?
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