Can a 50-year-old get term insurance?

Life in the 50s can be different for different people. For some, it could be an ideal time to focus on their personal goals and well-being, enjoy the fruits of their labour and live life to the fullest! However, for some, the 50s can be daunting, as they may not have saved enough and may have financial obligations to meet. There may still be bills to pay, loans to repay, and other goals to meet. If you fall into the latter category, your family may be left financially stranded - in your absence.

Having a proper financial backup plan in place can help prevent that from happening to your family. Here's where term insurance steps in.

A term insurance policy assists you in securing the financial future of your family when you are no longer around to support them. However, many people wonder whether purchasing term insurance in their 50s is a good decision. Come on! Let's find out.

What Is Term Insurance?

Term insurance offers financial protection for your loved ones against life’s uncertainties. It is an agreement between you and the insurer wherein you need to pay stipulated premiums for a certain period of time in exchange for which the insurer pays your family a sum of money - in case you pass away during the policy period. The claim amount can help them fulfil their financial goals, meet everyday expenses, settle existing loans and liabilities, pay for their child's education, etc.

Should You Buy Term Insurance Plan in Your 50s?

There is no ‘right’ age to buy term insurance. Ideally, sooner is better, but it is better to be late than never buy it - if you have family members who rely on your income for their expenses. So, yes, a 50-year-old can buy term insurance. But, term insurance premiums may be higher for people over 50 because diseases and health issues are more likely to strike at an older age, posing a greater risk to insurers. This leads to insurers charging higher premiums to compensate for the risk.

If you are above 50, you may likely pay more premiums for term insurance, but the peace of mind and the financial security it provides can be worth the cost. In case something unfortunate happens to you, term insurance can provide financial support for your financial dependents by helping them meet their goals such as children's higher education, marriage, etc., and also act as a regular source of income - ensuring that their everyday needs are covered.

Term Insurance For 50-Year-Olds - Why Is It Necessary?

1. Existing Debts

You may have taken out loans for various reasons. If you still have unsettled loans/liabilities in your 50s, then the best way to protect your family from the burden of repayments in your absence is term insurance. It can be purchased to cover the specific loan amount. Your family can use the cover amount to be debt-free without having to stress about arranging the money.

2. Financially Dependent Spouse

If your spouse is dependent on you financially, term insurance is one of the best ways to ensure that they are well taken care of - in your absence. This enables you to rest easy knowing that their future is in safe hands.

3. Financially Dependent Children

The concept of getting married and having a child in the early 20s is no longer common today. The proportion of unmarried individuals in the age bracket of 15-29 years has increased to 23% in 2019 from 17.2% in 2011, according to a government survey1. From the report, it is apparent that people are delaying marriage and having children.

If you belong to this category, then probably by the time you reach 50, your children will still be pursuing education and may rely on you for their needs and goals. Therefore, it is important for you to plan for their future so that they can achieve their goals. Term insurance will ensure that their financial future is secure and their dreams are not hampered - in your absence.

4.Future Liabilities & Obligations

Your decision to purchase term insurance should never be based on age, but rather on future liabilities and goals - their magnitude and duration. Your liabilities and long-term goals may include starting a business, buying a house, planning your child’s wedding, etc. These require extensive savings over a long period of time. As living costs rise, setting aside a substantial amount of money is nearly impossible. However, with term insurance, you can be certain that these dreams won't come to a halt - in your absence.

Now that we’ve seen how term insurance can help 50-year-olds, let’s see how much cover amount you should choose and how long should you take a policy -

What Is The Right Cover Amount And Policy Duration?

In order to determine the right cover amount, you need to choose an amount that can cover your family’s financial goals, act as income replacement, settle any loans/liabilities and adjust for inflation (make sure you factor in an inflation rate of 6-8%).

When it comes to policy duration, you need to consider your income, savings, and future expenses and then calculate the age at which you will have fulfilled your financial obligations and created enough wealth to last a lifetime. You'll need term insurance coverage until this age - perhaps with a five-year buffer.

Please keep in mind that term insurance is not a tool for creating wealth. Its purpose is to provide financial security for a family, so they can continue to live a comfortable life in spite of the unexpected loss of their main breadwinner.

Wrapping up!

When it comes to protecting the future of your dependents, it's never too late to buy term insurance - even in your 50s. It gives you peace of mind knowing that your loved ones will be taken care of no matter what life throws your way.

Sources Proportion of unmarried youth rising, finds govt survey³