Term Insurance Cover Post Retirement – X Things to Consider


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The road to a happy retirement is not all smooth. One must not take retirement planning lightly. Factors such as long term investing and the power of compounding will do wonders if you keep investing in your savings over the years. If the person increases the investments in the accumulation phase in line with the growth of salary every year, it will result in an even larger corpus.

Term Insurance Cover Post Retirement - X Things to Consider

In India, other goals like education funding for children takes priority over retirement. It is an emotional goal, and many investors do not pay attention to the importance of creating a healthy retirement corpus due to this. The key is never to utilise retirement investments designed for any other goal or need in the accumulation phase as it has to sustain you in your retirement years.

One of the biggest challenges that retirees face is how to make their retirement savings last a lifetime. Even if one has saved efficiently throughout one’s working life and accumulated a significant corpus, it may not be able to generate enough to sustain monthly expenses over the long term.

Assess the amount of money you will require to live the same lifestyle post retirement. For which, don’t forget to consider inflation. Start investing from an early age. This will be a long-term investment opportunity. The longer your accumulation phase, the longer your money will last.

Why Term Policy?

Term insurance policy is known as the purest form of life insurance. A term policy provides coverage for a specified period. In the case where the policyholder passes away during the term period, the insurer pays the death benefit to the nominee. Term insurance policy from reputable insurers such as Max Life Insurance provide comprehensive coverage at the lowest possible premiums. You can add riders to widen up the coverage.

The death benefit is payable as a lump sum, monthly payouts, or a combination of both to the nominees.

There’s no payout if the life assured outlives the policy term. However, these days, companies are offering Term Plans with Return of Premiums (TROPS), where insurance companies payback all the paid premium amount in case the life assured outlives the term period.

Would you need a Term Policy Post-Retirement

The function of life insurance is to protect the family from the loss income if the primary bread-earner passes away. How long you need to keep your term insurance policy depends mostly on your liabilities and your dependents. Although there is no harm in retaining your term policy, here are a few points to prove the importance of it post-retirement too:

  • When you retire, you no longer work to make ends meet. Continuing your term policy is advisable if you’re still paying off debt. After the demise of the policyholder, the insurance will take care of the remaining debt, which will reduce the burden on the family members.
  • If you still have a family to look after, continuing a term policy can be beneficial. In case of your untimely death, having term insurance will ensure your family’s financial security.
  • If your spouse depends on your pension post-retirement, then to ensure that he/she remains self-reliant even after your demise, a term policy is essential.

Affordable Premium Payments

Premiums of term plans shoot up after you cross 40 years of age. It is therefore advisable to buy a term policy at an early stage. For instance, if you are a 30 year old buying a term plan, your premium will be as low as Rs. 6900 for a sum assured of Rs.1 crore. Whereas, when you are 60 years old, about to retire, your premium will be Rs.58,000 for the same sum assured, which is quite a rise. As the difference is visible, it is wise to start your retirement planning at the earliest.

Limited Pay Option For Retirement

The most crucial benefit of limited pay option is that it frees you from paying premiums for your term insurance policy for an extended period. You have to pay the premiums for a limited tenure while your plan runs longer. Limited premium option thus allows you to pay off your premiums within your active working life before you retire. If you feel that your family may need financial assistance in case of your demise even in later years of your experience, then you can consider taking a longer coverage tenure.

A term policy with a more extended tenure promises coverage until 85 years of age which will thus continue even after retirement. If you want to leave a legacy for your nominee(s), then you can look at making the longest tenure for coverage.

Planning is the key to happy retirement. While term policy provides you financial security even in your retirement, you can also opt for short-term investment plans such as as savings account and mutual funds can also help build a retirement corpus.


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