Individuals who are 50 and above qualify as senior citizens. These individuals can buy a variety of insurance products, such as term plans and whole life insurance, to cater to their diverse financial needs. However, not many individuals in their late 50s or 60s consider getting life insurance. That said, let’s discuss more about life insurance for senior citizens and why it is important for them.
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Reasons Why Senior Citizens Consider Having a Life Insurance Plan
These reasons make it essential for senior citizens to have a functioning life insurance plan –
Retirement income along with financial independence can be offered to senior citizens through a comprehensive life insurance plan. Such an insurance plan serves as a savings vehicle and a reliable source of income for them at maturity. The policyholder’s family can use the insurance payout to pay debt, clear medical bills, sponsor higher studies, and more. It can also ensure their kids have a significant inheritance.
In case the insured passes away during the term period the spouse will avail the financial benefits of the plan especially if they are unable to support themselves. The sum received can also be utilized to pay for property tax or their legal obligations, if any.
Types of Insurance Plans for Senior Citizens
Life insurance plans designed for seniors can be broadly classified under three major categories – whole life insurance, guaranteed life insurance, and term life insurance.
Whole life insurance
A whole life insurance plan is designed to provide coverage to the insured for their entire life, and a death benefit, which is paid to their nominee or beneficiaries upon the insured policyholder’s untimely death. Note that individuals of all ages can get a whole life insurance plan. These insurance policies typically include a savings component plus life insurance coverage. This is why a whole life plan is more expensive compared to a term life insurance plan, which does not extend a savings component. A whole life policy has several attractive features, including consistent premium payout through the term, lifetime cover, growth in cash value, and tax-free withdrawals. Individuals can access their cash via loans and other withdrawal options owing to the guaranteed cash value of this plan.
Term Life Insurance
Term life insurance extends coverage for a prefixed period and a death benefit which is paid to the insured’s beneficiaries only in case the policyholder dies during the active policy term. With the end of the policy term, the coverage extended under the policy also ends. Since term plans are pure protection plans they do not necessarily come with additional perks like investment or annuity and are hence more affordable and flexible than say a whole life plan. Term insurance policies for senior citizens extend flexibility in terms of policy tenure, sum assured, and as well as payment mode and frequency. Note that some term insurance plans also allow policy renewal, extending the cover with the increase in the insured’s age. When it comes to choosing a term plan for senior citizens, it is vital to compare policy quotes from different insurers to pick the most affordable and comprehensive of the lot. It should be noted that some insurers might adjust policy premiums for seniors every year years so it is advisable to factor that when assessing cost.
Guaranteed Life Insurance Plan
Guaranteed insurance plans are tailored to the requirements of seniors who might have health issues, and they do not necessarily need to get a medical exam to obtain insurance coverage.
Top Features of Retirement Plans for Senior Citizens
Here are some of the features of senior citizen retirement plans that make them important for many.
- Retirement plans for senior citizens provide a regular stream of income after their retirement, ensuring their financial independence and security.
- These plans are designed for senior citizens, hence the entry age is set between the age of 45 and 55 years.
- These plans extend varied income options for seniors to choose from, all based on their individual needs and requirements.
- Individuals also get the flexibility to select their frequency of annuity payouts from monthly, quarterly, half-yearly, or annual options.
- Retirement plans also offer seniors tax benefits under the provisions of Section 80CCC of the Income Tax Act.
Top Benefits of Life Insurance Plan for Senior Citizens
Insurance policies for senior citizens come with several features and benefits besides extending financial security. Some of the benefits of this insurance plan include –
Elderly individuals with senior citizen insurance often feel respected and valued, which is indispensable for their overall physical and mental health.
These insurance plans help seniors reduce their financial stress and also aid their families in accounting for medical expenses, funeral expenses, and ongoing debts or liabilities, if any.
These plans also provide a reliable source of income for the retirees and beneficiaries, empowering them to become financially independent.
Insurance plans that help generate a regular stream of income further help seniors build a corpus. With the accumulated funds they can fulfill their long-forgotten wish or a pending financial goal without delaying it any further.
Ways to Choose The Right Kind of Life Insurance Plan for Senior Citizens
Choosing the right kind of insurance plan for the elderly is challenging, especially at present when the market is flooded with so many competitive options and insurance providers. While these life insurance plans are readily accessible, it can still be time-consuming to compare different policies to find the best one. However, in such a case, individuals can rely on a life insurance premium calculator to initiate basic comparisons and customize their plans based on their budget and requirements. In addition, when seeking comprehensive life insurance for a senior citizen it is important to read the fine print, especially the exclusions. This will help them prepare for a situation that would not necessarily be covered by life insurance. Furthermore, they should research more about the insurer and its reputation in the market to ensure they or the nominee do not have to deal with hassles to settle their claim.