With old age come a vast number of changes to one’s lifestyle. This change is especially seen with an individual’s source of income once the age of retirement rolls around. This can be a challenging time for these people as they are no longer in expectation of a monthly salary, and their health may start to decline as well.
Many individuals belonging to the older generation also fear for their families and spouses during this time. In addition to this, the drawbacks with existing life insurance plans for the older generation is that the plans require high premiums as well as having several restrictions and a long list of terms and conditions.
Best Types of Life Insurance Plan for Senior Citizens
The most common plans that are beneficial to senior citizens are whole life insurance plans. Some even opt for universal life insurance plans. Here are 3 varieties of plan that a senior citizen may consider buying to create a financial cushion:
a. Term Life Insurance
This type of life insurance involves providing coverage for a stipulated period. This period ends once the duration of the policy ends. These plans are more affordable for the average person in comparison to whole life policies. Several features of the plan can be altered, like premium payment amount, sum assured as well as tenure of the plan. The coverage may also change as one advance in age.
b. Whole Life Policies
The benefit of investing in a whole life policy is that one can invest in it at any age. It is also a comprehensive or all-inclusive policy that one buys for the remainder of their lives. Therefore, the policy period does not end until the death of the insured.
After which, the fund value is payable to the insured’s nominees. The price of these policies is higher because it involves both a savings component and provides coverage as well. It offers permanent protection that no other policy offers.
c. Tax Saving Plans
One of the characteristic features of the Invest 4G plan is that it offers certain tax exemptions. This is because the insured will be eligible for tax benefits under Section 80C and Section 10.
Therefore, this plan can contribute a great deal to the insured even after they are unable to receive a monthly income. From the maturity benefits to the periodical withdrawals, senior citizens can retain the lifestyle they choose to have well into their retirement.
5 Benefits of Senior Citizen Life Insurance Policies
At present, Canara HSBC Oriental Bank of Commerce Life Insurance offers an array of life insurance plan for senior citizens. One such plan is Invest 4G, which greatly contributes to one’s financial independence later in life while being affordable. The plan aligns with the above factors as it offers a reasonable 5 year lock in period. In addition to having flexible terms, it also offers the following benefits:
1. Maturity Benefits: The assured sum or fund value that is promised to the insured receives a 4% to 8% investment return. The assured sum involves the payment of 10% of the premium paid.
2. Death Benefit: In the event of the insured’s death after the lock-in period, the family can choose to receive a lump-sum payment or wait for the maturity period to end to receive the payment of fund value.
3. Loyalty Additions: These additions apply to the insured after 5 years. The individuals that pay their premiums on a timely basis are eligible for assured loyalty addition.
4. Withdrawals: One is capable of making partial withdrawals after 6 years from the commencement of the policy or if the life assured completes 18 years (whichever comes at the latest)
- Systematic Withdrawals: These withdrawals allow the insured to receive a certain payment, as per the percentage of the fund value, at regular intervals.
- Milestone Withdrawals: After surpassing the 5th and 10th year of the initiation of the policy, the insured receives a payment of 20% of the fund value.
5. Reduced Premium: After the premium payments made during the lock-in period, one can opt to pay a lower premium. However, this is subject to certain conditions.
Although every individual faces inevitable mishaps from time to time, the senior population is more susceptible to this. Therefore, having a backup whole life cover plan can prove extremely useful during these times.
4 Factors to Consider before Buying a Life Insurance Plan
The factors one has to consider before investing in life insurance can vary from person to person. However, before opting for any life insurance, one must consider the following factors:
Age is one of the more significant factors in investing in a life insurance scheme. If you opt for a insurance plan later in your life, you will have to pay a higher premium. However, if you plan to buy a life insurance plan early, you will enjoy a lot of benefits and one of them is lower premiums. As with age, chances of diseases also increase. Hence, your life insurance premium will depend on your age when you are buying a life insurance plan.
Learn about the advantages of buying a life insurance plan at an early age.
2. Medical Conditions
If one is suffering from pre-existing problems with their health, one should keep in mind the lock-in period. In case the disease acts up and requires one to avail medical assistance before the lock-in period, then they will not be able to pay for said medical bills through the insurance. Although one can discontinue the policy before the first five years, they will be liable to pay surrender charges.
3. Period of Waiting
This involves the time before which one can access the funds invested in the life insurance. The number of years can vary. This time is also known as the lock period. One should choose a plan that does not have a long lock in period so that one can avail the benefits of the plan as soon as possible.
The premium for most life insurance plans catering to the older population is inflated given the deterioration in health that is commonly seen. The premiums possess a gross investment return of 4% and 8%, which will be reflected after the maturity period of 15 years or in the event of the insured’s death (in the form of a lump sum).
Life insurance for senior citizens can prove beneficial to one’s family as well. The reason is that the funds invested in a life insurance plan can become the inheritance that one leaves their family. The insurance plan funds can also act as a source of a guaranteed regular income. Thus, allowing one to be independent even after they no longer receive a monthly salary. Upon the event of one’s death, their spouse, if alive, receives the payment. Therefore, the insurance will act as a pension fund that you can rely on later in life.