Most of the insurance providers offer life insurance plans to people up to 60/65 years of age. However, it makes complete sense to buy insurance even post 60 years of age if you have family members who are dependent on you. Most of the young people neglect buying life insurance plans majorly because they do not feel the need of it for themselves. For them, the sole purpose behind buying life insurance policy is to save on taxes.
Because of being away from the familial responsibilities, they do not consider life insurance as a need and thus overlook its benefits. However, one should not forget that a term life insurance policy can have varied impacts on a person’s financial portfolio depending upon the stage of life in which the policy is purchased.
The gain from a life insurance policy bought at 25 years of age might be higher that the benefits from the same policy, but bought at an age of 40. A policy with a term 20 years taken at the age of 25 might be very helpful to you at the age of 45 when you children would be pursuing higher studies. But, same policy if bought at 40 might not prove to be that a great help in your 60s.
Given below are some points to show a detailed analysis on the best time to buy a life insurance policy.
When Should I buy a Life Insurance Policy
Buying a life insurance policy at an early age has enormous benefits. Due to being related to power of compounding, a life insurance policy comes for lower amounts of premiums if started early. Also, youngsters, because they are fit and healthy, do not need to undergo a medical checkup prior to buying a life insurance policy. Depending upon the kind of policy that has been opted for, a life insurance policy provides with several financial advantages in addition to the life cover. A term life insurance is kind of a long-term savings policy that keeps compounding the money in the process of covering the policyholder against risks.
Cost of Buying Late
The most appropriate time to purchase a term life insurance policy is when you are young and fit. This is because a person without responsibilities can easily manage to pay the insurance premiums as there is more scope of saving. Term insurance policies are the best suited plans for the beginners. For instance, an individual buys a term insurance policy with a sum assured of Rs.1 Crore when he was 30 years of age. Considering that most policies expire when the policyholder turns 60, the term of his policy would come out to 30 years. Now, if the same person buys this policy at 35 of 40 years of age, then the term of the policy would automatically reduce to 25 or 20 years and the annual premium would automatically be more.
Correlation Between Term Insurance and Age
Looking at the above mentioned example it is clear that the policyholder’s age has a considerable role in ascertaining the level of premiums that a person has to pay towards the life insurance policy. Premiums are lower for the people who start early because they a comparatively a less risky affair for the insurer to cover.
A widespread mistake that most policyholders make is opting for an insufficient amount of cover for the term insurance policy. This often happens because people buy insurance late and then to reduce the higher amount of premiums they reduce the amount of cover. It is essential to make sure that the policy cover is enough to take care of basic expenses of your dependents in your absence. While calculating the final cover you should consider the key expenses such as loans, child’s marriage and education, and medical expenses. Therefore, it would never be wise to reduce the cover amount just to lessen the amount of premiums.
Life Insurance in 60s
Most of the insurers provide life insurance only till the age of 60/65 years. But if you have family members who are dependent on you even post 60, then you might consider life insurance post 60. In fact, insurers these days have started providing special life insurance plans for the earning senior citizen under which the policyholder has to pay the premiums till 90 years of age. As evident from the instances discussed above, it is not as cheap to buy life insurance policy late in life. However, such plan comes with certain restrictions, like most of such policies pay only 25 per cent of total paid premiums paid to the beneficiary in case the policyholder dies within 2 years from the inception of the plan.