Life Insurance Policy for Senior Citizens

Why Do Seniors Need Life Insurance?

By the time senior citizens reach retirement, they may have fulfilled their duty towards their families and seen their children well settled in life. However, there are often instances when senior citizens do need to care for their spouses, or their dependent children.
Some seniors may always need to pay off outstanding debts, such as home loans, medical loans, or educational loans.
With life expectancy going up in India, some seniors may also need to look after their older dependents and provide for their medical needs.
Therefore, there is a need for life insurance for senior citizens in the twilight of their lives.

Different Types of Life Insurance Plans For Senior Citizens

Despite the constraints of age, senior citizens have a choice of at least three types of life insurance policies: term life insurance, whole life insurance, and retirement insurance plans.
Each of these plans has different features that serve the different needs of senior citizens.

Term Life Insurance

As the name suggests, the term life insurance plan is for a specific term.
The plan offers different types of term insurance to suit the requirements of policy buyers.
The first type is the most common, in which the fixed sum assured is guaranteed throughout the life of the policy, and the premium is also a fixed sum for a fixed period, but it lapses if the policyholder survives the policy term.
The second type is one in which the sum assured can increase with time, which can take care of inflation.
The third type offers the return of premiums, incorporating a savings component. The premiums would be higher than the first type for the same sum assured.
The fourth type offers the facility of converting the term policy into a whole life policy later, providing much-needed flexibility.
Typically, these plans are protective plans and by far the cheapest insurance plans.

Whole Life Insurance

True to its name, a whole life insurance plan protects policyholders up to 99 or 100 years of age. Unlike term insurance, the whole life insurance plan is also a savings plan that combines protection through insurance with building a corpus through savings.
Whole life insurance plans offer policyholders a variety of ways to invest their hard-earned money in instruments that benefit them, such as wealth creation, tax breaks, reasonable growth, and, importantly, life insurance.

Retirement Plans for Senior Citizens

The moment people reach 65 years of age, their choices in life insurance for seniors become very limited. However, several insurers offer retirement plan options that combine investment, life cover, and regular income for policyholders. The unique feature of a retirement pension plan is that it is available for senior citizens up to 85 years of age.
Typically, most plans limit the age at entry to 65, but retirement pension plans are suitable for people who can enter the plan up to 85. This means that people who are between the ages of 66 and 85 can avail of the benefits of the retirement pension plans.
While retirement plans are available with an entry age of up to 85, it is always advisable for youngsters to start their insurance journey when they begin to earn an income. The major advantage of this practice is the low premium the policyholder would pay for the life cover. Further, today, it is possible to be covered for the policyholder’s whole life, up to 99 or 100 years.

What are the Benefits of Term Insurance for Senior Citizens?

Term insurance benefits for senior citizens include four important ones: dependent children, spouse, legacy, and the ability to pay off any outstanding loans.

Children Might be Dependent on You

While children are a joy for parents, circumstances could alter their lives by placing them in difficult situations later in life, especially in terms of finances. Obviously, parents would not want their children to be under pressure financially, much less their grandchildren. Therefore, parents can benefit their children and grandchildren by signing up for a term insurance policy.

Independence for The Spouse

In India, family is given the importance it deserves, and members tend to stick together in crises. The spouse is an equally important component of a family. The societal norms for the age difference between husbands and wives could be, on average, five years, which means that often, wives are left to fend for themselves when the husband passes away. The term insurance, therefore, can help the surviving member become independent.

Leave Behind a Legacy

Since family is the bedrock of Indian households, grandchildren become closely attached to their grandparents, and, therefore, grandparents do all they can to leave a legacy for their grandchildren. Term insurance is an excellent instrument for people to leave their legacies for their grandchildren. In the process, this legacy could work equally well for their children.

Take Care of Debt and Loans

In today’s day and age, people resort to taking loans for a variety of reasons like building a home, buying a car, performing a marriage, caring for the aged and educating children. Normally, the loans would be paid off, but it is possible that some portion of these loans could be unpaid because of some unforeseen circumstances. Therefore, term insurance would come in handy to help pay off any outstanding loans.

How to Select the Right Life Insurance for Senior Citizens in India?

The insurance market has evolved over the last two decades from a single insurer. Since then, the insurance market has attracted many new insurers.
The apt way to select the right life insurance policy is to first set goals and timelines. These have to be matched with the ability to pay the premiums without defaulting. These can be written down to be referred to when policy buyers speak to the insurers.
Since competition is severe, all insurers would offer comparisons of their products with the products of others. Policy buyers can clarify any doubts before accepting a proposal.
With new rules and regulations being formulated, if at any point you feel that the insurance policy is not going to be helpful, you can cancel it during the free-look period, which is typically 15 days but has been extended up to 30 days.
There are three broad categories of insurance plans for senior citizens: whole life insurance, term insurance, and retirement plans. Almost all insurers offer all three plans, with variations created for the needs of specific groups of people.
Therefore, the best approach is to talk to a few insurers, ask them to explain the features, and then choose the policy that best suits the policyholder's goals.

Top Features of Life Insurance for Senior Citizens in India

The main features of term insurance plans for senior citizens are:

• Offering protection for a specific period
• Paying the death benefits to the nominee
• Lapsing the policy if the policyholder outlives the policy term
• Offering flexibility to choose the sum assured, term of coverage and payments
• Restricting the age of entry to people below 60 or 65 years of age
• Increasing coverage after the policy has run for a specific period
• Offering joint-term insurance plans for spouses
• Offering riders that may include coverage for critical illnesses, permanent or partial disabilities and accidents

The main features of whole life insurance plans include:

• Limited payment plan in which the policyholder pays for a limited term, but insurance cover is for life
• Variable insurance plans that can offer flexibility in the payment of premiums
• A single premium plan is almost like an annuity plan, but it would be considered an insurance plan with associated tax benefits.
• Joint insurance plans with a spouse which is useful when one of the joint holders passes away, but the policy terms continue with the other surviving holder
• Non-participating insurance plans in which the policyholder is not eligible for any bonuses declared by the insurer based on profits earned
• Participating insurance plans in which the insurer declares bonuses determined by the profits earned by the insurer and the policyholder is eligible to receive bonuses declared by the insurer
• Constant premium insurance plan in which the policyholder pays a constant premium throughout the life, and when the holder dies, the nominee receives assured death benefits

The main features of retirement pension plans include:

• Choice of multiple plans suitable for the requirements of each individual
• Joint plans are available under various plans
• When the plan vests, benefits are assured
• People can pay on a single premium option or accumulate for a definite period by paying premiums for the period
• Post the vesting age, liquidity improves
• Income tax benefits are available as per current laws
• The plan offers an insurance component in the accumulation plan whereby ten times the yearly premium is the sum assured for the premium paying term, with life cover ending on the vesting date
• Special discounts are offered on parameters determined by each insurer

Frequently Asked Questions

What is the best life insurance for seniors?

The best life insurance for seniors would be a type of policy that can provide a safety net for you and your family, and that will suit your needs.

Can we take insurance for 70 years old?

Yes, you can take insurance for 70-year-olds, and the age at entry could be 80 or 85. The insurance is restricted to the policy premium-paying terms only.

Can I buy life insurance for my 75-year-old mother?

Yes, you can, but insurance will be restricted to either 5 years up to age 80 or 10 years up to age 85. After that, the policy can run up to 100 years without insurance coverage.

Which insurance is best for 65 and older?

The retirement plans are best for people aged 65 and older.

How does senior life insurance work?

All three categories of policies—term insurance, whole life insurance, and retirement plans—work in the same manner for seniors and those under 65.
In normal term life insurance policies for senior citizens, the premiums paid will not be refunded after the term expires. This works in the same manner as health or vehicle insurance. However, some insurers offer a return of premium as an option, which will push up the premiums substantially.
The death benefits will be paid to the nominee if the policyholder dies during the policy term.
Whole life insurance for senior citizens has an insurance component and a savings component. In these policies, policyholders get an assured sum of money if they survive the policy term, along with bonuses if they have participated in bonus schemes.
The retirement plans work on the principle of annuity being paid if a certain sum of money is kept with the insurer. The sum of money could be in the form of a single premium or accumulated over a specific policy term.
All the above life insurance for senior citizens comes with relevant income tax benefits.