Recently, a 60-year-old
doctor from Hyderabad bought a term plan worth Rs 1 crore for a
term of 15-years, paid a single premium of Rs 8 lakh. If you know
anything about life insurance coverage, this should surprise you.
Ideally, a 60-something, nearing retirement has no reason to buy
or extend his life coverage by 15 years. In fact, financial
advisors usually plan your portfolio in such a way that by
retirement your term covers usually end.
However, data from insurance
companies tell you a different story. Term life insurance plan
sales for the 50+ age group is on a rise. "The 50+ age category
comprised merely 1-1.5% of life term sales on our platform in
FY15. This number has gone up by more than 3 times to nearly 5% in
FY16," says Yashish Dahiya, founder and CEO of Policybazaar.com.
Financial advisors also confirm this trend. What's the reason?
Life cycle shifts, experts say.
People are getting married late,
having kids even later and then there are long-term housing loans
that rollover the retirement age. "Dependants and liabilities do
not necessarily end at retirement age. In such cases people are
choosing to go for longer covers," says Anil Rego, CEO, Right
Horizons, an investment advisory company. "Typical profile of
people seeking such cover have either their kids financially
dependent on them till very in their life or they have liabilities
and unpaid debts," adds Dahiya.
For the Hyderabad-based doctor who
created a record by paying a premium of Rs 8 lakh on an online
platform, it was liabilities. Also, he continues to practice. So
there is an income to protect. That is another category.
Increasingly, people who are choosing to work beyond retirement
and therefore extending the term-cover makes sense.
The industry realizes this need and
have been coming up with appropriate covers. "It wasn't long back
when term insurance was only providing cover till the age of 55.
Now, insurance companies now offer term insurance plans that you
can buy at 65 and will provide coverage up to the age of 80
years," says Dahiya. However, watch out for the premiums. A Rs 1
crore policy with a term of 20-years for a 60-year-old male will
cost around Rs 50,000- Rs 70,000. So, if you think you fall in the
category of late-bloomers where your financial responsibilities
will spill over your retirement age, it is best to buy a longer-
term plan and lock the rate now.