Term Insurance
Term Insurance for Senior Citizens
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7 min read | Updated on January 08, 2025, 12:42 IST
SUMMARY
Mr. Suresh Gupta retired last month after 40 years of service in the central government. Guptaji, as he is lovingly called, has no active life insurance policy. He is in perfect health and is earning a pension of ₹60,000 per month from his employer. He recently became a grandfather to twin girls. He also receives approximately ₹4 lakh per annum as interest on fixed deposits. Guptaji needs tax planning suggestions but believes he is ‘too old’ to apply for term insurance.
However, in the Indian context, senior family members' responsibilities and roles never cease to exist. Due to traditional value systems, grandparents often raise grandchildren and manage household affairs. Hence, term insurance is critical for senior citizens to ensure their loved ones are adequately cared for even when they are not around.
This blog discusses everything you need to know about senior citizens' term insurance plans.
Who is a senior citizen as per Indian laws/standards?
What are features of term insurance for senior citizens?
The following table illustrates the most critical features of term insurance plans for senior citizens:
| Features | Description |
|---|---|
| Age Limit/Entry Age | The typical entry age in term plans is 18. However, most plans allow senior citizens up to 65-70 years to enter into a term insurance plan. The life cover can be extended up to the age of 85 years. Hence, in case of the policyholder’s demise before attaining 85 years of age, the nominee will receive the predetermined death benefit. |
| Death Benefit | A term plan for senior citizens is typically pure-protection-based cover. Hence, the nominee will receive the ‘sum assured’ if the senior citizen passes away with the policy still in force. |
| Premium | Premiums are dependent on the entry age of a policyholder. Hence, if an individual enters after attaining 60 years of age, the premium ought to be higher than usual. Example: If you buy term insurance at 60 years of age, the premium can be anywhere between ₹16,000-25,000 per month with a sum assured of ₹1 crore. |
| Medical Test | For a senior citizen to buy term insurance, a medical test is required to rule out pre-existing conditions like diabetes or cardiovascular disorders. |
| Add-Ons/Riders | Some popular add-ons include accidental death benefit, waiver of future premium, return of premium, terminal illness cover, etc. |
How term insurance can help senior citizens in financial planning?
Here are a few benefits of term insurance that can help in better financial planning for senior citizens:
- Tax benefits: You are entitled to claim a deduction under section 80C of the Income Tax Act, 1961 against the premium paid for term insurance. In addition, any death benefit received by the nominees is typically tax-free under section 10(10D) of the Act.
| Particulars | AY 2025-26 (with term insurance) (in ₹) | AY 2025-26 (without term insurance) (in ₹) |
|---|---|---|
| Income under the head salary (pension) | 7,20,000 | 7,20,000 |
| Income under the head other sources (interest on FD) | 4,00,000 | 4,00,000 |
| Gross total income | 11,20,000 | 11,20,000 |
| Standard deduction | -50,000 | -50,000 |
| Net income | 10,70,000 | 10,70,000 |
| Less: Deduction u/s 80TTB (interest on FD) | -50,000 | -50,000 |
| Deduction u/s 80C (Term Insurance) | -1,50,000 | - |
| Taxable Income | 8,70,000 | 10,20,000 |
| Income Tax | 84,000 | 1,16,000 |
| Health and Education Cess @4% | 3,360 | 4,640 |
| Total Tax Liability | 87,360 | 1,20,640 |
| Excess Tax Paid | - | 33,280 |
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Financial support for beneficiaries/spouse: The family/nominees receive tax-free death benefits, which ensure their financial safety in the unfortunate event of the policyholder's death.
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Debt clearance and estate planning: If the senior citizen has any outstanding debts (such as loans or mortgages), the amount can be paid out of the death benefits received.
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Cost-effective alternative: Term insurance is quite cost-effective as it provides high coverage (from ₹1-3 crores) by paying a modest premium.
What are a few common misconceptions about term insurance for senior citizens?
Here are a few misconceptions about term insurance for senior citizens:
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I am too old to qualify: There are many plans designed specifically for senior citizens, and the entry age can range from 65-70 years. You need to consult an agent before believing this myth.
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Term insurance is too expensive for senior citizens: There is an obvious increase in the premiums due to the risk borne by insurance companies. However, term plans for seniors are often structured to be more affordable than whole-life policies. Insurers may offer plans with fixed premiums that do not increase with age or tailored coverage options that reduce costs.
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Payouts are limited: The ‘death benefit’ or ‘sum assured’ offered by several Indian insurance companies can be up to ₹3 crore, a substantial amount meant to ensure the financial independence of dependents.
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Health issues can prevent coverage. Again, this is a myth. While medical issues might be a factor in determining premiums and eligibility, various insurers have varying levels of medical scrutiny, including a complete waiver of health examination.
How to choose the best term insurance for senior citizens: A checklist
Here is a checklist to consider while buying term insurance for senior citizens:
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Assess your coverage needs based on current and future financial obligations, such as debts, living expenses, and potential medical costs.
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Compare the maximum entry age limit permitted by different insurance companies.
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Evaluate premium costs and prefer policies where costs do not increase with age.
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Check the CSR (Claim Settlement Ratio) of the shortlisted insurance companies.
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Review the quality of customer support and service.
Summing Up
FAQs
What is the maximum age for senior citizens in India to qualify for term insurance?
In India, most term insurance plans allow senior citizens to enter into a policy up to 65-70 years of age, with coverage extending up to 85 years.
Are there any term insurance plans that do not require a medical exam for senior citizens?
Yes, some term insurance plans offer coverage to senior citizens without a compulsory medical exam, though the availability and terms may vary between insurers.
Can senior citizens get term insurance if they have pre-existing health conditions?
Senior citizens with pre-existing health conditions can still obtain term insurance, but the premiums may be higher, and the scope of coverage could vary depending on the insurer's policies.
What are the tax benefits of buying term insurance for senior citizens?
Premiums paid for term insurance are eligible for tax deductions under section 80C of the Income Tax Act, and death benefits received are generally tax-free under Section 10(10D).
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