Term insurance after 50?

Your life ideally needs to be insured in your 30s. but even if you miss this timeline, you may buy an insurance policy in 50s for the sake of securing the future of your dependents. let’s take a look at different scenarios

Life insurance bought by an individual is not for himself, but it is for his dependents. It is primarily a means of income replacement, wherein the loss of income of the policy holder is made good by the insurance amount on his death.

For this reason, it generally makes sense to purchase a life insurance policy when one is in his thirties. Insurance purchased at an early age comes cheap as well, compared to insurance purchased when one is in his fifties or sixties. For this reason, financial advisors usually recommend purchasing a term insurance policy early in life. However, there may be some cases when it makes sense to buy a term policy after 50. Here are some such situations:

If you have certain critical goals in life which have not been met yet, then it makes sense to take a term insurance after 50. Some of the most common goals that are likely to be pending are higher education and marriage goals for your children. In this case, if something untoward were to happen to the main earning member of the family, the spouse and children may be unable to realise the corpus needed for these goals. The insurance amount would help in meeting these goals.

Retirement is an important goal and people plan for it by saving regularly. However, this goal requires a huge corpus and you may not be able to save enough for this by the time you turn 50 years. If you die in your fifties and if your spouse is not working, there won’t be sufficient corpus left for your spouse to lead a comfortable life. He or she will have to depend on children or others to be taken care of financially. Therefore you should have sufficient term cover in case you think your retirement corpus falls short of its target.

Another important reason why you need insurance after 50 years is when you have bank loans or any other liabilities that have to be repaid. Home loans are generally the longest in tenure and in many cases extend beyond the age of 50 as well. This is especially true if you buy a house when you are in your forties and your retirement age is 60. In such a case, your demise will leave your dependents exposed to the liability. Failure to close the loan will lead the bank to sell the security, which results in an unpleasant situation for your dependents. Therefore having an insurance cover for the loan amount will help in closing the loan in such situations.

In many cases, people in their fifties have children who start earning and become financially independent. However, sometimes the dependent is disabled and is unable to become financially independent because of the disability. In such cases, it becomes extremely important to provide for the dependent when you are not around. Having a term insurance cover can help and the dependent is provided for from the cover amount.

In case you have your own business, it is possible that at any point in time, there are business obligations to third parties. Unless your business is structured as a company, you and your family will be personally liable to settle third party dues. If you do not have enough corpus amount to pay outsiders, your dependents will face the burden of settling these dues. Proc-eeds from a term plan can be used to meet business obligations.

Imagine a situation where you and your spouse are dependent on pension income for sustenance post retirement. In most cases, if the pension earner dies, the pension stops. In such a case, the spouse is left with no income to fall back upon. When there is a term cover, this amount can be used to meet living expenses.

These are some scenarios when you may need a term insurance even after you cross the age of 50. However, if your critical goals are taken care of, you have a sufficient retirement corpus and you do not have liabilities on your books, it may make sense to avoid taking a term plan post the age of 50. You could instead opt for a health insurance, which becomes very critical after the age of 50.