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Why Should you not Stop your Term Insurance Policy at 65?

By PolicyBazaar

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Published: 10 December 2020Last Updated On: 08 February 2021

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A term policy is without any argument the single most essential financial instrument, which will secure the future of your family. The specific functions and needs can differ from one family to some other. Still many insurance agents & financial experts try to generalize the term of the coverage & fix the tenure at the standard age of retirement, which is 65 years.

However, this might not make sense always. Does every person retire or are their familial responsibilities over by the time they are 65 years old? It may not be the case all the time. Therefore, here are some essential reasons why you might wish to review the coverage tenure of your term insurance policy.

1. You might not retire till the time you turn 65 years’ old

Although the conventional retirement age may be at 60 years, not all people are willing to get retired so early in their life. There are various examples from the industry of entertainment as well as the entrepreneurial world in which there can be seen public figures who continue to be active long after that age. A lot of white-collared professionals also take the roles of consultancy or part-time gigs after their official age of retirement.

In case you can service the payment of premiums, there isn’t a reason for limiting coverage to some particular age. As an alternative option, you can go for a limited term for the payment of premium, where you may get a shorter duration for making the payment, for instance, till they are 50 years old, & opt for coverage till you become 99 years old. The insurance premiums, in this situation, would be higher but your need to guarantee your capability of making the payments as you’ll become a working professional who draws a regular income.

2. People get married late and hence start their families late

The focus on higher education levels, the requirement to protect your financial independence, and the management of a competitive working environment have shifted the average age for getting married for all genders near 30 (in most of the cases). As a result, people have chosen to delay their parenthood as well.

This means that a lot of people become parents when they are in their early 40s or late 30s. Hence, by the time their children finish their studies and reach the marriageable age, they would be somewhere in their 70s and still looking after the responsibilities of their family.

In such a situation, in case something happens to them before their children become independent individuals, it can be a huge financial and emotional loss for your loved ones. The extension of your term insurance policy will make sure that the loss, which they will face in terms of your financial contribution to your loved ones does not affect their financial security in the future.

3. With every passing day, the cost of living is rising

The general life expectancy of people who are 70 years old and above has increased by 18% according to recent statistics. We can easily thank the medical advancements and improvement in the healthcare sector. But the rising cost of living as well as the increasing healthcare cost has thrown a lot of people off-track from their financial plan.

As per the recent reports, the charges of hospitalization have risen big time throughout the last few years. Since the costs keep on rising, things are predicted to become even more challenging for the retiring people. For the management of the expenses, a lot of people will have the obligation of working way beyond the conventional age of retirement or curtail their lifestyle expenses.

For ensuring that a case of extended hospitalization doesn’t derail the finances of the family, it is recommended that you extend your term insurance policy.

4. Term insurance helps to ensure that the legacy of the policyholders live on

One of the main reasons that most people work past their age of retirement is for leaving behind a financial legacy for their family, which will ensure that they live a comfortable life. Amongst the various options for long-term investment, a term insurance plan could be construed in the form of a simple, low-cost investment for legacy planning, which helps you in ensuring a fixed corpus for your heir.

For instance, let us assume that you want to apply for a coverage amount of AED 1 million. It will be very hard to meet such a financial outlay out of a regular salary or income. However, a term insurance policy guarantees that your loved ones will receive a lump-sum death benefit in case you go for the extension of your coverage to the age up to the limit the insurance provider allows.

To Sum Up!

There are many insurance agents & financial experts who have generalized the period of the term insurance plan and fixed it at the standard age of retirement- 65 years. However, this isn’t always valid. Not all people retire at the age of 65 years due to various reasons and one of the major reasons is the financial responsibility of their family.

Now, the question is that in such a situation, should your term insurance policy end when you turn 65 years old. The answer is no. In this article, we have discussed in detail the reasons why you must extend your term plan beyond 65 years of age. You must pick up a term policy, which works for you and not the one having a standard age bracket.