First things first, term insurance is not for you but for your family. It is the corpus that your dependents can use after your demise. Now, a pertinent question arises: Do you actually need term insurance after the age of 50 years? Well, mostly no, but there might be a few extreme situations where you have limited choice and buying a term insurance will be worthwhile.
Let us plunge in this scenario based assessment a bit deeper and see which situations make buying a term plan at the age of 50 beneficial and where we can simply do away with it. Here we will take broad life situations and you can take your cues.
Situation 1: You have dependents
If you have kids who are not yet settled (financially independent) and the savings that you currently have might not be sufficient, then you should get a term insurance even at the ripe age of 50. These days, this is a common scenario owing to late marriages and having kids at a late age. By the time you are 50, your kids are most probably still studying, so it makes sense to have term insurance, even at a higher premium. However, I strongly recommend that you should get a term insurance in your 30s not later than that otherwise you will end up paying higher premium.
Situation 2: You are still financially weak
Though you are officially retired but you still continue to work owing to ongoing financial responsibilities then you must have a term insurance. You must protect the ones for whom you are working so hard.
Situation 3: You want your spouse to be self-sufficient
Though you have saved a little bit throughout your life for your post-retirement financial maintenance but this corpus might not be sufficient. And, you don’t want your wife to be dependent on anyone else or lead a frugal life then term insurance is a good investment for you. Also, according to a research, women usually live 4-5 years longer than their male partner. Take a stock of your savings and decide wisely.
Situation 4: You still have liabilities
Usually, banks loans stretch till you hit the age of 60 and this is usually planned at your end. However, what about unplanned personal loan taken from friends and family taken during distress times? In this situation your family will need a huge amount to pay off your debts, if something was to happen to you. Here term insurance can be your saviour.
Above are some of the situations when you might need to buy term insurance at the age of 50 even if you have to pay higher premiums. However, in most situations you are kind of financially sorted by the age of 50. You already have a post-retirement corpus built up, while kids are almost on their path of financial independence. In such a scenario, investing in a health plan rather than term will make much more sense.
The premium rate of a term plan after the age of 50 is prohibitively exorbitant. For example, a married man at the age of 50 years has to spend nearly R26,500 to seek R1 crore life cover from a private insurer of 20 years’ tenure.
However, premium rates for 30-year and 40-year married men would be around R8,500 and R16,000, respectively.
That’s why it’s always wise to buy a term cover at an early age. However, you can still opt for one at this age only if extremely necessary and unavoidable.
ON YOUR TERMS
* If you have kids who are not yet financially independent and your savings aren’t big enough to quell concerns, you should get a term insurance even after 50
* Another situation where a term plan could come in handy is when you are officially retired but continue to work owing to financial responsibilities
* If you don’t want your wife to be dependent on anyone else or forced to lead a frugal life, term insurance could be a good investment for you. Research says that women usually outlive their male partner by 4-5 years
The writer is CEO & co-founder, Policybazaar.com