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5 reasons why you should not take Term insurance till 75 yrs !

by Manish Chauhan · 93 comments

Got a term plan for your family? Or may be you’re planning to take the term plan in a few days. If you are, good for you! . One of the biggest questions, every person considering term insurance has, is – “Should I take the cover for the maximum period?” . This is exactly what Chetan also asked on our questions and answers forum

Aegon provides coverage upto 75 years of age. or 20 25 30 35 40 years. I am confused which policy term is better to get maximum benefits?

Just like him, hundreds of investors have asked me this question over and over again, and I tell them, “Just take it only until you reach 60 years of age.”

And they happily ignore my suggestion; as if I am crazy, suggesting this to them. The “Insurance only till 60 years” looks kooky to them – kind of a “wrong deal” and they want to get “maximum benefit” out of the term plan. “The chances of my family receiving the  claim amount is higher when I am covered for long” is the common thought process of every person who is in the mad rush of buying the highest possible tenure.

term insurance plan for higher tenure

Trust me, that’s flawed thinking and I will explain why today. More than a sermon, think of this article as a discussion, where I put some points in front of you and you reflect and ask yourself – “Does it really make sense? or not?” and then make your own decision. So here are those 5 reasons on – why you should not take Insurance till the age of 75 years or more

1. You don’t need it beyond your working life

You really need to ask yourself the question – “Why am I taking Life Insurance?” and the answer is – “Because right now, I don’t have enough net worth, which will help my family if I am gone” or in other words – “Because my family is financially dependent on me.”

For a person who is not earning and does not bring money home, his death will cause family only emotional loss; not financial loss. Hence, logically you need to cover yourself through a life insurance product, only for the time you are working and others are financially dependent on you.

2. You will have “probably” have enough wealth by the time you retire anyway

Stretching the 1st point, if you are taking life insurance cover until you are 70-75 years, will you really need it at that time? Do you really feel that you will have any reason to have a cover of 1 crore that time (after 30-40 years?) . I am sure (more confident than you), that you would have completed all your financial goals by that time, you will have your own home by that time and you will have done everything in your life by that time. You focus area at that old age will be very different than what you focus on right now.

To understand this point, you have to stop for a moment and go into 2040-50; when you are retired and close to the heaven’s door. Are your children really financially dependent on your income – which does not exist? Is your spouse dependent on your income? You must have already accumulated enough wealth by that time and you must be getting some income out of that. Your death has nothing to do with family cash flows at the time.

3. The premium factors in your tenure already

Most of the people who feel that they are smart enough to take term plan till 75 years, forget that on the other side is a professional business running for decades now. They have hired people who are 10 times smarter, who design products (they are called Actuaries) that generate large profits for companies and not investors. Life Insurance is a “for-profit” business. They design things, so that they earn profit. If a company allows you to take a plan that lasts until you turn 75, why have they done that? Why did they allow that to happen? The premiums they charge already factor in everything. You pay premiums to get that term plan, it does not come free!

4. You will live longer – and they already know that.

Like I said in my last point, companies are “for-profit” businesses. They will not issue you a policy if your chances of living beyond 75 is not high. If you are a healthy person, already earning well, have access to good health care, what are the chances you will live beyond 75 years of age? Extremely high, that’s what!

Look around you – Are people dying early on average? No, you see people living beyond 80-85 already and here we are talking about your future which is 30-40 years away, when the average life expectancy of an average person in India would be closer to 73-76 years anyway (as per projections by govt studies.)

Now just imagine this … Compared to the 1.25 billion people in our country, are you in top 25% or lower?

Which means that you have much much better prospects to live beyond 80-85 years.  Which brings me to another point, that you should seriously worry about about your retirement planning a lot more than the less important question of insurance beyond 70-75 years.

Even when we do financial planning for our clients, we make sure that we plan for their retirement beyond 85 years and have them covered only till 60 yrs or even lower if they feel they will retire earlier. The important point to understand here is that, a life insurance coverage is just a support for your family in your early life when you are making money, your financial replacement, if you will. So when a life insurance company issues you a term plan until 75 years, it’s not you who are smart, but the company! They know, with a really high degree of probability, you will keep paying the premiums till 75 years.

It’s all chance. Yes, there will be people who will die before they reach 75 years of age and yes, their family will get a lot of money, but it really is just the game of chances … Companies make profits because of those who will live beyond 75 years and not by those who die before that.

5. The value of your sum assured is peanuts later

I hear it most of the time – “I am taking the term plan till 75 years, so that even if I die, my family will get the money. So, the higher the tenure, higher the chances of making money.” But they forget that by doing so, they are actually helping the insurance guys make profit, but lets say you die at 70 years. Celebrations! Your family will get that 1 crore, which at this moment sounds good, but will not be worth a lot that time.

Let me show you the mirror that lets you look into the future :)

Let’s say you are a 30 year old guy, and your monthly expenses are 40k per month. You say to yourself, “Let me take that term plan worth 1 crore so that in case, I die my family can get 1 crore which will provide them some good monthly income.”

It would be very good number if you die early in your life! . With each passing year that 1 crore will be worth less. If you die the next year of taking the term plan, the worth of that 1 crore is pretty much same, 1 crore. But if you die after 10 yrs, that 1 crore will be worth 50 lacs in today’s world. So getting 1 crore after 10 yrs is same as getting 50 lacs right now. Are you getting my point? The money you get in term plan is a constant number, not linked to inflation!

So imagine you have taken the term plan till 75 years and you die at 70 (after 40 yrs of taking the term plan), what is the worth of that same 1 crore at that time? Hold your breath! It’ll not more than 6-7 lacs assuming a inflation of 7% and even if inflation for next 40 yrs is a small 5%, it would not be worth 15 lacs today! . So when your family gets that 1 crore after 40 yrs, it’s kind of worthless. No one would be depending on that money anyway; it’s just a bonus on your children’s inheritance money!

Act like a real informed and smart investor

I have been seeing this madness for many months now and was constantly wondering why people are focusing so much on this small thing called “long tenure” in the term plan. I see investors abandoning one insurance company for another just because the other company is offering a term plan till 75 years.

You are allowing yourself to fall into a trap if you do this. If you have already taken the term plan till 75 years, do not worry … do not cancel it, just let it run it’s course. Stop paying premiums when you feel that your family can be taken care of, by the wealth you have generated. If you are planning to take a term plan right now, take it for as long as it takes you to retire, probably till 55 to 60 years, but not beyond that.

Would be happy to hear your thoughts and your views on this topic! . You have taken the term plan for very high tenure ! .



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{ 92 comments… read them below or add one }

1 Hema Aravind April 22, 2013 at 11:10 am

Very nice article, Manish. I totally agree that term plan tenure should be just as long as one’s retirement age and it’s not required beyond that. I especially liked the second point – the sole purpose of taking term insurance is to protect one’s unrealized financial goals in the event of his premature demise. Assuming that he will achieve all his financial goals by retirement age, a term plan beyond that age becomes unnecessary.

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2 Manish Chauhan April 26, 2013 at 12:48 pm

Yea .. thanks for your acknowledgement

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3 suresan raja April 22, 2013 at 11:31 am

Sir, It’s an eye opener. I also agree that after the retirement , one’s regular income will be stopped. So there will be a question to how to pay the premium after the retirement.
For last 3/4 days I was planning to take a term plan from Ageon. I am 52 years old and there is no any insurance with me. I check with their website or online policy. They are not allowing me to take the policy less than 30 lacs even I am not a smoker. For 30 lacs, for the term 15 years, its cost me Rs.17000/- p.a. I am having wife and 2 kids.

Could you please suggest me a term plan of which company,sum,period to take.
Regards,
Suresan Raja

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4 KRANTI April 22, 2013 at 6:53 pm

Check out with (1.) SBI (2.) HDFC Click2Protect (3.) Aviva

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5 suresan raja April 23, 2013 at 9:15 am

Thanks Kranti for your suggestions.

Regards,
Suresan Raja

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6 Manish Chauhan April 26, 2013 at 12:47 pm

Did you check with Aviva also ?

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7 NAGAMOHAN April 22, 2013 at 12:06 pm

Very Nice Article,I would be happy if you had made a comparison on the Insurance Premium upto the age of 60 and upto the age of 75 and Indicate the additional cost spent without any big benefits.

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8 ashal jauhari April 22, 2013 at 2:38 pm

Dear Nagamohan, you can help us to know it.

thanks

Ashal

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9 NAGAMOHAN April 22, 2013 at 5:08 pm

Dear Ashal Jauhari,
I made a comparison with Aegon Religare “i-Term Plan” for two options
Option-I
Age of sum Assured-30Years
Covered upto age -75 Years
Tenure of Insurance-45 Years
Category – Non Smoker
Additional Riders – No riders considered

Option-II
Age of sum Assured-30Years
Covered upto age -60 Years
Tenure of Insurance-30 Years
Category – Non Smoker
Additional Riders – No riders considered

The premium for Option-I and II are Rs.8400/ and Rs.7300/ per annum respectively.If we consider coverage upto age of 60 is enough ,under option-I we have to pay Rs.2,52,000(Rs.8400*30) and under Option-II we have to pay Rs.2,19,000(Rs.7300*30) which gives a total saving of Rs.33,000/.

If u have Invested the remaining Rs.1100 in a Fixed deposit Every year (First year Rs.1100 for 30 years,2 nd Year Rs.1100 for 29 years and so on)at the Interest rate of 10%(assumed) you could get a Total maturity of Rs.199037/.Which comes almost around 90% of the Total premium paid under Option-II(Rs.199037/219000).This option holds good only if you feel that Insurance only needed upto the earning period.

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10 ashaljauhari April 22, 2013 at 5:40 pm

Dear Nagamohan, thanks for the research. So what’s your learning from the research? the Manish is right or wrong in his approach to ask for insurance only upto earning years?

Thanks

Ashal

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11 sharad gupta April 22, 2013 at 2:25 pm

Thanks Manish for this nice and usefull article. If people use insurance for earning or misusing then its impact comes on premium.

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12 Manish Chauhan April 26, 2013 at 12:18 pm

Correct

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13 Anant April 22, 2013 at 3:29 pm

really informative manish.

however i have a question regarding why there is difference in premiums for same amount of policies with different companies.
for eg. 1Cr insurance- ICICI charges around 15k but SBI around 7k??

for your info, i checked the same in few insurance comparing websites.

kindly help.

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14 Manish Chauhan April 26, 2013 at 12:18 pm

Its because they have different pricing methods .. like in any businesses

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15 Biswa Singh April 22, 2013 at 4:48 pm

Hi Manish,

Thanks for this info. Actually wherever i myself thinking aobut something i get post from you explainning it. Its just a meer coincedence. When i took Bharati Axa which covers me till 60 i got to know about term insurance which covers for 75 years. Infact in many TVs programs the personal finance experts suggest go for term insurance which covers for longer time. But i also thought to my self
1. I would have accumulated enough money to survive post my retirement given that i have taken a huge health insurance to cover for my family now itself.
2. My children will not be dependent on me. If i will be no more after my retirement then whatever i have by that time will be enough for my wife.
3. It may not be relevant but if i will not have term insurance after 60 then i will not be lazy now and focus on my investments and wealth creation more seriously and i am confident that i will acquire much more wealth by retirement which will obviously nullify any requirement of having a term insurance.

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16 Manish Chauhan April 26, 2013 at 12:15 pm

Yes Biswa

Thats the right way of thinking !

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17 KRANTI April 22, 2013 at 6:59 pm

My Personal Opinion after reading this article: (1.) “75 yrs or 60yrs……take it for longest duration 75yrs….and if you want to discontinue @ the age of 60 then do not pay premiums….else keep paying premiums till 75″. (2.) As 1 crore is peanuts at the age of 70 from now….so the premium for that will be peanut-shell so you can afford to pay na ??? (3.) Lastly 75 ya phir 60 ?? arey bhai jald-sey-jald TERM PLAN LEY aur aggey bhaad life mein !!

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18 Manish Chauhan April 26, 2013 at 12:04 pm

Thanks for your views Kranti

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19 Arvind April 22, 2013 at 9:01 pm

Nothing great about suggestion… If affordability of premium post retirement is the case, then one can break any year even after 60 years… If 1 Crore is going to be peanuts at 70 years, then premium committed till maximum age will be broken peanuts as well :) 60 or 75 or 100 doesn’t make much difference… If the premium varies drastically between 60 0r 75 or 100, then it makes sense to go for 60 years or further low period etc.,

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20 Manish Chauhan April 26, 2013 at 12:04 pm

Thanks for your views Arvind

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21 Ram April 23, 2013 at 6:25 am

Great article Manish! Even before coming to the end of the article, I was thinking I have already taken a term plan for probably till I’m 75…what do I do? Maybe I’ll just stop paying after I turn 60…and viola, you have given the same suggestion…guess reading Jagoinvestor articles has made me wiser!

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22 Manish Chauhan April 26, 2013 at 11:55 am

Yea :)

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23 harshit April 23, 2013 at 9:10 am

gr8 article manish….really heads off….what a critical thinking and we all r getting into the traps.

I have a query is one time premium plan is best or annual premium plan is best in case of term insurance.

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24 Manish Chauhan April 26, 2013 at 11:52 am

Annual premium is better for most of the people

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25 Sriniv April 23, 2013 at 12:53 pm

The point is a valid one.

On this issue, a few more points can be thought of, which can impact the decision.

There is a difference in premium for various terms fo sae sum assured and as term increases, premium increases. Thus, it is advisable to take the insurance for the term required. But, if you check, the difference in the premia for 5 years is not more than Rs 1000-1500(I checked Aegon religare for 10000000 for 15 years and 20 year period). In such case, if one is in doubt, one can take a policy for slightly higher term. This will give one flexibility, if one wants to increase the term at the last moment. One has the flexibility to discontinue anytime, one wishes.

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26 Manish Chauhan April 26, 2013 at 11:49 am

Good one

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27 Rachana Oza April 23, 2013 at 2:27 pm

Very good article, It is really important that you should have plan for retirement at younger age, and not for term insurance after 60 years,as income is the essential element to be consider at the time of retirement and not insurance.

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28 Manish Chauhan April 26, 2013 at 11:48 am

True !

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29 Chetan Ambi April 24, 2013 at 7:32 am

Nice one Manish.. As mentioned in the forum you came up with this article.. Thanks for clearing my doubt in the forum and now all jagoinvestor readers’ doubts.

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30 Manish Chauhan April 26, 2013 at 11:39 am

Thanks for asking it , It gives me ideas !

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31 Parag Rodrigues April 24, 2013 at 11:10 am

Good Article Manish.

Paying premium for another 15 yr (till 75 yrs)s would be a peanut at that time too. Although, the value would get convert to lacs with inflation rate, it would be still an additional financial flow for family.

Have Good day ahead.

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32 Manish Chauhan April 26, 2013 at 11:33 am

Yes, Now its on you if you feel its a good rational to go for 75 yrs or not . I personally dont think so .. but you might feel like that. nothing wrong in it :)

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33 Rajeshwar Reddy April 24, 2013 at 6:26 pm

Hi Manishji,

My observations….
1. If 1 crore is peanuts at age of 70 then correspondingly the last premiums paid also should be considered with the same calculations. As per the inflation the premiums we are paying at that time are much more peanuts.
2. Death is certain but the timing is uncertain. Nobody can predict it.So insuring oneself at an early age might be the right choice when having financial responsibilities.Am i right?
3. I partly agree that term insurance is not necessary after the working age? Because most of the people are retiring from their jobs and still working at later stages now a days.So no harm in paying the little money at that time…if you are starting the plan in an early age.
Please clarify.

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34 Manish Chauhan April 26, 2013 at 11:21 am

Yes, all your points are correct . At the end if you have to take decision based on your understanding of the subject .

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35 shaggy April 25, 2013 at 10:21 pm

manish… sorry to say that this is an half baked article and not true or applicable with many people from different financial class…… hope JI is NOT short of productive topics…… and as i know this is not manish… kindly post an other article with uses of term plan and how to manage it cleverly to safe guard various situation at different episodes of life….

a well-wisher

shaggy

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36 Manish Chauhan April 26, 2013 at 10:34 am

Shaggy

Thanks for your views . I had put my views on the topic and concluded that one should not just shift from one insurer to another just for this reason that the other one is giving it for 75 yrs . Why do you feel its half baked ? Which point do you feel is not correct ?

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37 shaggy April 26, 2013 at 9:59 pm

hi manish…. i just recorded my views here….

“Should I take the cover for the maximum period?”
>YES, just take it…. after all you can stop paying peanuts at your ease/based on your achievement/need …..

“Does it really make sense? or not?”
> this question is hypothetical…. answer lies with in your strategy….

JI- You don’t need it beyond your working life
> very strange though…. who dose not need an extra protection… what is the sufficient money at any point of life for your beloveds?

JI- For a person who is not earning and does not bring money home, his death will cause family only emotional loss; not financial loss.
> first of all how u get an high covered term insurance if you are not earnign? and what an adamant logic is that emotional loss should not replace by financial gain…. think how morally help full for family members?

JI- Hence, logically you need to cover yourself through a life insurance product, only for the time you are working and others are financially dependent on you.
> you are working are not the dependents are DEPENDENTS

2. You will have “probably” have enough wealth by the time you retire anyway
> YOU/JI or who gives me the guarantee THIS

JI- that you would have completed all your financial goals by that time.
> onlu if your alive

JI- The premium factors in your tenure already. They have hired people who are 10 times smarter, who design products (they are called Actuaries) that generate large profits for companies and not investors.
> why your are getting in to their PLATE of food????
> have any insurance company ever said we are in to “Insurance Charity” they all ways said we are in to “insurance business”

JI- Life Insurance is a “for-profit” business. They design things, so that they earn profit.
> this is TRUE for ALL insurance Products NOT ONLY FOR TERM INSURANCE

JI-You pay premiums to get that term plan, it does not come free!
> there is no free lunch in the world
> pay pee nuts and make term plan to fit well as a strategic support

JI- You will live longer – and they already know that.
> good to know and every body love too
> you guarantee that? then why any one should not cover them self by spending so called peanuts

JI- Now just imagine this … Compared to the 1.25 billion people in our country, are you in top 25% or lower?
> macro economics rarely help peoples damages that shake their world at basic micro level

JI- The value of your sum assured is peanuts later
> this is MOST irresponsible statement……
> no sum is valued to peanuts other than if its clearly equal to cost of peanuts….
> people who all calling 8000 premium a peanut or who may think 75lacks or 150 lacks a peanut after 40-60 years…. NEED to Understand ONE LOGIC….
“the value of the money is NOT determined based on how much you have it”
Example- bill gates will never get a Kg of GOLD for just 1 Dollar & he will never pay 1 million dollars for a packet of salted chips…..

JI- Your family will get that 1 crore, which at this moment sounds good, but will not be worth a lot that time.
> then take it for 100 crores!!!!!!!!!!

Let me show you the mirror that lets you look into the future :)

Let’s say you are a 30 year old guy, and your monthly expenses are 40k per month. You say to yourself, “Let me take that term plan worth 1 crore so that in case, I die my family can get 1 crore which will provide them some good monthly income.”

JI-The money you get in term plan is a constant number, not linked to inflation!
> oh now some body want a samsung galaxy for 2 rupees
> keep shuffling your needs with hedged Insurance Limits ( as do with your investmentsssssss……….. stockssssssssss……….. earningsssssssssssss….. etc etc)

If you NEED INSURANCE just Buy TERM plans
IF you NEED INVESTMENT products then the whole financial world is open for you….
try to play smart with mixing both… you end up reading an other blog which talks about Financial BLUNDERS……. ( hey you, unit liked policy guys…. happy going hhhmmmmm ;-)

term plans are huge risk on insurance companies and thanks for competence environment in INDIA…… last but not least this is one night mare for INSURANCE AGENTS- sabse bada kiladies…….

Thanks manish for allowing me to share my madness….
hope it will add some fun in the space

Shaggy

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38 shaggy April 26, 2013 at 10:29 pm

this should not be taken under the light of too much depending on Insurance…. people live with hope and work hard to reach their goals and majority will win the race…. but when it comes to INSURANCE then its a matter of unexpected and against NO GUARANTEE….

Thanks Manish

Shaggy

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39 Manish Chauhan May 6, 2013 at 7:28 pm

Welcome

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40 Ram May 1, 2013 at 3:20 pm

Shaggy,

I’m sorry but I read your entire post hoping to see some hint of logic. It seemed like a lot of ranting to me. I wonder what you’re so upset about. It’s just an article.

Regards,
Ram.

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41 Shaggy May 1, 2013 at 4:49 pm

Hi Ram…

oh I don’t believe you read it full……. thanks hahahha
its not ranting…. just a reply….
you sounded like
“oh why we should be upset its just a single murder”
“oh whats big just one house is robbed”

I have a rebel mind about something which not look right to me on media…. because i respect media a lot…. i cant JUST keep quite…

please tally the number of comments for the article in favor of term insurance with the number of comments to the one against term insurance…. so get an idea of right and wrong…

majority of people who developed rejection felling are not bothered about mentioning it….. Mahatma Gandhi friends….. but my friend name is chandra shekar azad ….. hahhahah

you call it ranting…. no logic… not to be upset(like help less)…. and so on….

i just name it FIGHT….

Reagrds,
shaggy

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42 sevan April 27, 2013 at 7:09 pm

Why bother how much the Company makes profit out of this? The companies are definitely there to make profits and no one has claimed that they are doing this for charity. Its their work to roll out different products and our choice whether to opt it or not. Even pure “Health” Insurances are “for-profit” Business to the respective Companies. So one must not buy that too?

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43 Manish Chauhan May 6, 2013 at 6:41 pm

You wont believe , many people do not understand this point .. They look at it from charity !

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44 siddhant April 29, 2013 at 9:42 am

Do not agree with this article, If you are assuming average age is increasing effectivelly the productive age will also increase, How did you forget that?

also about the long tenure, I would suggest a longer tenure because you can always stop the policy at any point of time but can not take a new one later,

Sorry but do not agree with this advise at all, I would go for the highest possible tenure & once I reach the stage where my corpus is good enough I will just stop paying, that is more sane option than taking policy for shorter term…..

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45 Ram May 1, 2013 at 3:14 pm

Siddhant, even today people don’t get jobs after they are 60 years old. The reason? Because there is a LARGE pool of young people already waiting for jobs. This pool will only get LARGER by the time you and I are 60. You think we’ll be offered jobs at 60 when today itself people are not getting jobs?

So think again, will productive age really increase? Yes, maybe the person’s ability to produce will remain but what use is ability if there is no job (i.e. platform to produce)?

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46 Gayathri Iyer May 2, 2013 at 12:26 pm

Nice Article.. But some how, like the most of the above comments, I do feel that insurance should be taken for maximum eligible period now as –
a) it cost only a few extra bucks now – literally few hundred more annually;
b) future is uncertain – the fact that ‘you should have built your retirement corpus by 60′ may not always become true – for various reasons and honestly, many people do opt for alternate ways of earning even beyond age of 60 – by means of consultancy, business, coaching, part-times, etc. to get that monthly income, so any unfortunate event though beyond 60 may impact the financial status and
c) you always can stop paying the premiums @ retirement – if you have got the corpus by that time – but you will definitely not be eligible to take fresh term insurance at that time – so better take now.

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47 Manish Chauhan May 6, 2013 at 4:43 pm

At the end its upto you .. If you feel its worth going for extra tenure, please go ahead !

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48 angan chandra May 16, 2013 at 5:45 pm

very nice article, something different. It highlited the hidden fact of Term plan & it’s true that there is no need to continue term plan beyond your retirement age. So if you buy plan at 30-35 years age of cover 1 cr. for 75 years, if your death happens around 70 year of age. That 1 cr. of no value of then, considering the premium paid during this 30-35 years.

very nice post—

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49 Manish Chauhan May 18, 2013 at 12:17 pm

Thanks for appreciation :)

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50 Hitesh Siroya May 17, 2013 at 12:19 pm

Very nice Article, i have already done my term plan and it will end at 62 years of my aga. it seems i have taken right decision.

Thanks Manish by glancing on this.

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51 Manish Chauhan May 18, 2013 at 12:13 pm

YEs . .good decision !

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52 Rajesh May 17, 2013 at 4:33 pm

Hi Manish

Thanks for the Great articles! It makes much sense that a Term insurance is needed only till your retirement.

I have a question on the Term insurance that i’m planning to take one..

Will the new IRDA guidelines for life products affect the premium rates for Term insurance? Do i need to wait till Oct 13 or should i go head and buy one? Thanks for your expert opinions!

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53 angan chandra May 18, 2013 at 12:01 pm

you can wait till Oct’13 provided your birth date shouldn’t fall within Oct’13, if fall it will increase the premium amount. As you know in term plan the early age you enter will pay less premium & for later age premium will increase.

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54 Manish Chauhan May 18, 2013 at 12:08 pm

Yes it can change, you can never be sure on this but !

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55 shibu sam May 22, 2013 at 11:59 am

Exactly what I have in mind is written here, if you invest 4500 a month in RD for 10 years, you will get approx 9 lacs, guaranteed…

Same if you invest 4500 in life insurance, the maturity amount will be approx 500000 + loyalty additions which may be 2 to 2.5 lacs….

you are investing the money thinking you will live longer and get this money after 10 years… so better go for RD rather than life insurnace

Insurance is not an investment… just think this tag line before taking insurance…

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56 Manish Chauhan May 25, 2013 at 5:27 pm

Yes , exactly my thoughts

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57 Sadanand Nayak June 1, 2013 at 11:36 am

It is totally an individual decision whether to be insured or not after 60 years. Just an another thought came to my mind.

If someone has absolutely made up his mind of getting insured till 75 years of age, then it make sense for him/her to buy insurance till 75 years of age right now, instead of now buying till 60 and then buying an another insurance at 60 for another 15 years term.

Considering the current premium quote for 75 lakhs Sum Assured for a 30 year male non- smoker (quote as per Aegon Religare website), you are going to loose around Rs. 32,000/-. Kindly note Rs.32,000/- is the discounted net present value (Discount rate considered is 9%). The actual saving will be higher than this amount.

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58 Manish Chauhan June 4, 2013 at 4:42 pm

Yes, agree with that !

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59 Himanshu Pant June 5, 2013 at 11:19 am

quite an interesting take on this million $$$ or rather Rs question but I think has a couple of generalizations which can be risky

a) Although life expectancy is increasing but so are cases of untimely deaths due to lifestyle diseases ( High BP , cardiac problems) and other incurable diseases ( like cancer )

b) With reference to pt 1 , I think we do need it beyond our working life to at least support those are going to be life long dependant on us like spouse.

c) Having enough wealth by the time I retire looks highly improbable considering the current market uncertainties ;).. And we have to note that unlike our previous generation , most of us are in private organizations which go by the rule of hire and fire so we can not make any projections based on our current salary for future financial state. At best we can be optimistic.

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60 Manish Chauhan June 8, 2013 at 11:52 am

Himanshu

a) Yes, thats the reason we take the insurance , right

b) She is dependent on your money , not you personally . I am not sure if you are still clear about financial dependence point . If you are not bring any money home , then if you are there or not there, how does it matter ?

c) Then its a perception issue . If you really feel that by retirement you cant arrange for wealth , then you should better take it till 75 yrs !

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61 DEEPAK SHARMA June 13, 2013 at 8:56 pm

Thanks manish ji,
good to read your blogs,
but i have a questions , my family (6 member)totally depends on me in this case i am thinking that i should purchase the term plan of rs 1 crore up to 75 yrs . please suggest which company’s term plan is better for me . or some other way regarding subject. realy confused please help.thanks

deepak sharma
09717896523

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62 Manish Chauhan June 14, 2013 at 10:41 am

You can look at Aviva or HDFC

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63 Reshma June 17, 2013 at 8:23 pm

Hi Manish,

Nice article. I see your point on why term plans should not be covered forever! The real purpose behind having the insurance itself gets overlooked. But you have not considered one aspect here. Recently the retirement age has got increased from 58 to 60 years. Considering that, there is a high possibility that the retirement age after 20 -30 years will be further increased. So I would suggest to have the term insurance plan at least until you are 65.

Regards,
Reshma

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64 Manish Chauhan June 21, 2013 at 3:50 pm

Reshma

Not sure on that. Retirement age of 60 is there because physically its not possible for an average person to work beyond that . I dont think retirement age wil go up in future like 70-75 yrs, rather I feel it will come down over long term .

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65 Sreelatha July 2, 2013 at 11:14 am

Finally, someone who writes sense! I agree that its better to take a TI later in life, if one wants to that is and not make these insurance companies richer!

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66 Manish Chauhan July 5, 2013 at 10:38 am

Thanks

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67 Mahesh July 5, 2013 at 4:24 pm

I do not fully agree on this.

Insurance is all about probabilities. Longer duration means higher probability and hence higher protection. Extra bit of money will help spouse to take care of him/herself even if all other responsibilities are fulfilled.

If you never have to claim insurance in your life, then you are very lucky. You will be extra lucky if you don’t have to claim till 75. My vote is to take that extra mile and cover for longer period.

Hope the best, prepare for the worst!!!

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68 Manish Chauhan July 15, 2013 at 2:26 pm

Thanks for your views on this Mahesh !

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69 Kundan July 7, 2013 at 1:38 am

The best thing which I understood is to go for a 75 years of tenure and leave the policy after earning years are over

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70 Ganesh kumar July 14, 2013 at 12:04 am

Dear Mr. Manish,

Thanks for your valuable inputs. I am 34 yrs old NRE, can i take online policy from here? Can you suggest some of them as well.

Looking for your feedback.

Regards,

Ganesh Kumar

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71 Manish Chauhan July 15, 2013 at 12:17 pm

Online policy from where ?

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72 Nihar Shah August 1, 2013 at 10:45 pm

Hi Manish,

First of all Thank you so much for providing such a critical information on your website.

I am currently working and my company has a Group Health Insurance Policy which covers me. I have my individual Tata AIG Mediclaim and New India Insurance Accident Policy worth 5 and 10 Lacs respectively.

I have been married for more than 2 years now and due to circumstances my Wife still doesn’t have any Insurance cover. We both were working abroad and were Insured by our respective companies.

Now that we have shifted to India, I still have my Mediclaim and Accident Policies running but I now need to take Health Insurance and Term Insurance for my Wife.

I had spoken to one of my good friend regarding this and she had suggested to take Oriental Family Floater for me and my Wife. After researching on Web I was certain to buy Oriental Policy till I visited your website! Smile

However I am confused in following area:

After reading your couple of posts where you have mentioned Oriental Family Floater is ideal if you want to cover your parents below 60, otherwise you can suggest some other family floater policy (but you didn’t name the policy there) I really got confused. However in my case I don’t want my Parents to be included as they have their own policy.

Q1. Will it still be the best option to buy Oriental Family Floater?
Q2. If so, can I also add my children dynamically in the policy in future?

Additionally I had decided to take up Term Insurance for my Wife too.

For Term Insurance, I am confused between two products

a. HDFC Click 2 Protect
(Cover All types of Death but doesnt have accidental rider)

b. ICICI iCare with Accidental benifit
(Doesn’t cover the death due to Sports like Mountaineering, Para-sailing Skydiving etc. Death Due to War. Also when I spoke to ICICI Customer Care also said that they don’t cover any Breach of law like for e.g. if a person dies while crossing a road anywhere apart from Zebra Crossing! But where do we find Zebra crossing in India? This actually alarmed me and made me worried!

Q3. Request you to please suggest which Term Plan should I go with?

Appreciate your prompt response!
Thanks,
Nihar

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73 Manish Chauhan August 5, 2013 at 12:39 pm

1. Yes it is a good policy , go for it

2. No , it wont be dynamic, you have to manually inform them about adding them ! .

3. Aviva is a good option

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74 Nihar Shah August 5, 2013 at 12:58 pm

Thanks Manish!

I will do as said! Appreciate it.

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75 Nihar Shah August 5, 2013 at 7:24 pm

Manish,

Could you please tell me your personal preference between ICICI iCare and HDFC Click2Protect? Which one out of these two you would go for?

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76 Manish Chauhan August 9, 2013 at 10:58 am

HDFC

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77 Nihar Shah August 9, 2013 at 11:48 am

Thanks Manish! Appreciate it… :)

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78 Bharat September 7, 2013 at 8:34 pm

Manish,

HDFC & AVIVA – 50lakh each – no choosing any riders – till age 60.

Is this ideal ? Please suggest.

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79 Manish Chauhan September 18, 2013 at 9:17 am

Yea looks good

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80 Hvishal October 8, 2013 at 2:13 pm

Hi

I want to buy term insurance of up to 1 CR as per the income formula but want to go with two different companies for 50 lac each. I’m planning to buy it from ICICI iCare and HDFC click2protect. Are these good plans, i believe both of these doesn’t require medical. Are there any other better plans. Please suggest.

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81 Manish Chauhan October 18, 2013 at 11:13 pm

I dont think its a good idea now with so cheap premiums to go for 2 plans, only take one .. HDFC or Aviva or ICICI are all good options !

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82 Hvishal October 8, 2013 at 2:21 pm

Also for the same SA 50 lac, ICIC iCare option II has around 12k premium and HDFC click2protect has around 8,500 premium. HDFC also doesn’t have medical but premium is lower than ICICI.

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83 Manish Chauhan October 18, 2013 at 11:12 pm

HDFC has medicals, just that below 50 lacs they dont do it !

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84 feroz November 16, 2013 at 4:59 pm

my cousins in dubai working i need term plan in NRI which best plan ur idea?

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85 RK November 20, 2013 at 12:56 am

Manish… Nice article… I have kind of made a mistake since I have recently taken the iterm policy from aegon till 75 years… What’s the remedy here?

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86 Manish Chauhan November 23, 2013 at 6:34 pm

Nothing much .. Just do not do anything right now ..

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87 Dhivya December 2, 2013 at 6:57 pm

wow eye opener….

yes ur absolutely right…
i took 75 yrs under aegon religare :( 2 yrs passed by…
but happy that i took a term insurance… will wait till next year until the policy end date n take up a new policy… ya 2 yrs got wasted but my money over the forthcoming years get saved :)
thanks again for writing this article.

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88 Manish Chauhan December 12, 2013 at 3:35 pm

Welcome !

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89 Satish December 5, 2013 at 9:35 pm

SBI Life is offering term plan with increasing cover, i.e increase in Basic Sum Assured by 10% (at simple rate) at the end of every 5th Policy Year without any increase in Premium. Will that be good to beat inflation.
.

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90 Manish Chauhan December 12, 2013 at 2:59 pm

Yea its a good option, but the premiums are also high !

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91 mayank January 24, 2014 at 1:24 pm

thanx a lot first of all.

MY CURRENT AGE IS 24 YEARS.

i have read the article. my question is that difference in premium is only 516 rupees per year for coverage till 75 year & 60 year.(AEGON iterm plan-90 lakhs) then why to take chance ? if i dont want to continue after 60 years of age then just stop paying premium and thats all. but in case i wish to go for new cover on that age it will be highly costly.
and another question is that why should WASTE money with insurance company by taking insurance till 60 years only ?as per general circumstances average age of indian is 75 currently. (instead take till 75 and pay around 150000 more to insurance company and take 1 crore is a better deal what i think) WHAT IS YOUR OPINION ?

Thanks a lot again.

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92 Manish Chauhan January 30, 2014 at 6:53 pm

Yes, if you are comfortable with it, go ahead !

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