long period (40-45 years) term insurance

POSTED BY gaurava ON September 18, 2012 4:25 pm COMMENTS (38)

hi,

 

I am planning to get a term insurance for me and my wife. I am of 29 and my wife is of 27. Most of the insurance provider I found on net covers maximum tenure of 30 years. Is there any insurance company which gives term insurance for a tenure of 40-45 years.

 

Also share good/bad feedback regarding any insurance provider.

 

38 replies on this article “long period (40-45 years) term insurance”

  1. Muthu Krishnan V says:

    by concrete, i meant at least something will be there instead of a chance event like “death”.

    I have confidence in equity over the next 20 years atleast by which time my corpus will have moved to majority debt. disclosure: I invest only in qltef at this point of time.

    even if it does not work out, I will not have burden of paying “life insurance premium” after my retirement :). I probably would have stopped paying premium much before than and proving the insurance company bet true (again my very first statement)

  2. Karthik says:

    “I would prefer something concrete instead of leaving it to β€œchance”. To each his own.”

    What is concrete in the investment plan?
    Everything will have a risk. Only all debt portfolio will have something concrete.
    If you believe 10/12/15 Equity/MF investment return for a horizon of 30/40 years is concrete, I have nothing to say. Excel sheets will give you a great picture. But that will not come true.

  3. Karthik says:

    Muthukrishnan,

    1. I dont know whether i m explaining this point correctly. What I m trying to say is, the investment plan which a person will have will be a substantial amount combined of his savings power for a month and not for this exact 100 Rs which was saved from the insurance. No one can tell that the amount spent for unnecessary items or lavish expenses are affecting his wealth creation. I am saying the expense incurred is very minimum.

    2,3 and 5 – I have mentioned in my first response to you that, people who look forward for financial freedom should have crores. Do you think everyone can have achieve this dream of having financial freedom? I agree everyone has to work towards that but in the end how many will succeed? Subra has come up with a article today related to retirement needs. Check it out and lets see how many can save enough for their retirement atleast rather than looking towards financial freedom.

    100 Rs per month which is saved for 45 yrs will give you around 6 lakhs and 11000 Rs saved for 15 years will give you around 4 Lakhs. This is not huge in front of the risk cover which I have about 1 crore. I would have paid around 3L for 30 yrs policy and I would have paid around 5L for 45 yrs policy.

    The gamble which I am taking is 2 Lakhs over a period of 45 years which will give me a chance(not literally πŸ™‚ ) to give my kids 1 crore. When someone is providing an opportunity like this, I would take it, and if it succeeds, I will be happy. If not, I will think that I had a Pizza of 100 Rs for every month all this 30 yrs..

    1. Muthu Krishnan V says:

      little drops of water make an ocean. Kindly ensure that your plan is capable of paying for the premiums after your retirement. subra’s post seems to be an offshoot from manish’s calculator.

      I would prefer something concrete instead of leaving it to “chance”. To each his own.

      You are foregoing 100Rs here. You would be doing the same in a lot of other areas as well, just 100rs, 200r or 500Rs. Everything added up would be a big amount Think about it.

      1. Muthu Krishnan V says:

        “Check it out and lets see how many can save enough for their retirement atleast rather than looking towards financial freedom. ”

        if you are expressing doubt about saving even for retirement, how do you propose to pay insurance premium after retirement?

        1. Karthik says:

          I am not expressing doubt about me. I am talking about generally in that point based on that Subra’s article..

      2. Karthik says:

        I am not foregoing that 100 Rs. It is a balance of savings and expenses which I am talking about. I had already taken a hit of 100 Rs for my insurance so I know to reduce my expenses to that extent.

  4. Ramesh says:

    The calculations done above have been without taking any time-value of the future payments. Eg, Rs 100 payable today is NOT EQUAL to paying Rs 100 20 years down the line.

    Single Premium value for different time periods for Male Non-smoker, 33 year old in iTerm for an insurance coverage of 2 crore: These are exclusive of the service taxes and mostly tells us about the money which the company is getting for providing the insurance amount.

    3.03 lakhs – 25 year
    3.93 lakhs – 30 year
    5.05 lakhs – 35 year
    6.52 lakhs – 40 year

    I would think these to include the time-value of money over the whole time periods. Now for providing the insurance for the period of 25th-40th years, you will be paying an extra 3.5 lakhs. To get the benefit of 2 crore for your children, you will have to die between those years.
    At the rate of 11% CAGR over 40 years, that 3.5 lakhs will give you around 2.2 crores without you having to die.

    check the premises and the calculations.

    Ramesh

  5. Karthik says:

    1. I mean about investing 100 Rs separately. Say he will be investing 2000 Rs as SIP in a fund. It may be 2100 or 3000 or whatever amount.
    2. When I m 30 yrs of old, I don’t know whether i will attain my financial freedom or not. The policy is being taken at present. Anyhow the person has the option to stop the premium once he has attained his financial freedom.
    3. People thinking towards financial freedom, should not worry about their death after they had attained their financial freedom and never after being 60/65 yrs old. Children worshipping for their parent’s life depends on how the parents behaved with the child(parenting skills) not because of insurances.
    4. Agree that it depends on a person how he takes this expense.
    5. If after retirement, if the person doesn’t have max 11000 per year to pay his insurance then he hasn’t attained his financial freedom

    1. Muthu Krishnan V says:

      1. That is the way to go. Why would he not invest for 30 or 45 years?
      2. Plan for your financial freedom. Stopping premium benefits the insurance company, “see my very first comment, “i think insurers are betting on premiums not being in later years and hence pocket the higher premium.” “.
      3. If financial freedom is attained, the corpus can be used by the dependents after the person’s death. THIS MEANS INSURANCE IS NOT REQUIRED AT THIS POINT. It is not only children, their spouses as well who enter the picture. You do not know how they will behave. This is a different topic altogether.
      4. okay – but it should fit into his bigger financial picture.
      5. Please refer to Manish’s calculator sent out the other day. 1 crore totally vanishes in 8 years at 8% return and expense of 50K at 6% inflation.

      I like this debate by the way.

      1. Muthu Krishnan V says:

        correction for point 5, It is 50L and not 1 crore

  6. Muthu Krishnan V says:

    1. “No one will invest that particular100 Rs in separate fund do that exactly.” – The same person is committing to invest in a term policy for 45 years so why not in a good mutual fund? – lack of discipline.

    2. “If a person who has attained financial freedom for himself” – this person need not have any insurance. His dependents will inherit his wealth after him/her.

    3. “help the son/daughter who can increase their networth” – This is like a lottery ticket. What is the guarantee that the insured will expire before the term of the policy. Instead if he invests something, there is a guarantee that atleast something will be left behind. Also, the son/daughter should be worshipping for longer life for the parent and not for him to expire before the term of the policy πŸ™‚

    4. ” I can consider additional 700 also as an expense” this is a continuous expense for 45 long years. My motto is to reduce expenses as much as possible and that too continuous ones.

    1. Muthu Krishnan V says:

      5. who will pay for the premium after retirement (when active income ceases to come in). Will it be out of your retirement corpus? Or do you expect your son/daughter to pay for the premium?

  7. Karthik says:

    Muthu Krishnan,

    People expect any money invested to have returns. It is logical that 100 Rs or 1000 Rs saved can also be invested to earn returns. Investing 100 Rs for 45 yrs who has aim to attain financial freedom is just possible in theory. No one will invest that particular100 Rs in separate fund do that exactly. We can’t say what is the return earned for that 100 Rs. Here it comes the discipline of saving by reducing their expenses and pooling the money for their investments. Depends on how the investor takes it. No one can tell a person that he lost “N” money because he spent it instead of investing. When I can consider 7300 Rs as expense, I can consider additional 700 also as an expense

    If a person who has attained financial freedom for himself, should need to have crores and should have to support his retirement with his own money earned before he attained financial freedom. My point is just to help the son/daughter who can increase their networth with this insurance claim like an asset written on their name and not for the insured expenses in oldage.

    Thanks
    Karthik

  8. gaurava says:

    I recently read that policy provider can cancel or increase yearly payable amount of the policy anytime giving any junk reason? Is that true? Do I need to go for medical checkup every year and depending on that policy provider is eligible to increase/cancel the policy.

    1. Dear Gaurava, can you share the reading or the link from where you are quoting this? As far as I know, once a prem. is finalized as per our current health condition, job profile, family history, the prem. ‘ll remain same.

      Still I want to know your source of info.

      Thanks

      Ashal

  9. Muthu Krishnan V says:

    karthik/ashal, any further comments on my answers above. Would like to close the discussion.

  10. Muthu Krishnan V says:

    As there is not much social security in india, i think insurers are betting on premiums not being in later years and hence pocket the higher premium.

    Do you want dependents betting on your death in your old age? I read somewhere that old people were destroying their policies for fear of their family members finding it out :(.

    100Rs invested per month for 45 years at 10% growth equals 10.5 L and at 12% equals 21.5L. This money could be used by you in your old age.

    1. Muthu Krishnan V says:

      correction, if you take a 30 year policy at 30 years. In addition to investing 100rs per month for 45 years, you will also be investing 7300 per year for 15 years from age 60. That will further add to the corpus above.

  11. Karthik says:

    Amounts are without riders
    1 Crore SA, 30 Yrs old Male
    25 Yrs – 7200, 30 Yrs – 7300, 35 Yrs – 7300, 40 Yrs – 7500. 45 Yrs – 8400

    1 Crore for a 25 Yrs old Male
    25 Yrs – 6300, 30 Yrs – 6400. 35 Yrs – 6400. 40 Yrs – 6500, 45 Yrs – 7000

    Difference is about 1000 Rs. When people pay 30K for offline plans, now this 1100/600 Rs per year is a big difference and needs justification. πŸ™‚
    In case of 30 yrs old guy, 33000 for 30 yrs is additionally paid and 126000 paid for additional 15 yrs. Effectively 10600 paid yrly for additional 15 yrs.
    In case of 25 yrs old guy, 21000 for 35 yrs is additionally paid and 105000 paid for additional 15 yrs. Effectively 8400 paid yrly for additional 15 yrs.

    Agree that, there is a cost for additional 15 yrs coverage. Never denied that.
    So, Checked the same 1 Crore separate policy for a 60 yr old person for 15 yrs. The amount comes as 80,400 for an year.

    Happy Insuring.. Lets A2D then.. πŸ™‚

  12. Karthik says:

    Dear Ashal, Additional point mentioned by you

    “From this point onwards, the prem. of a term cover can be directed towards basic investment instead of risk protection.”

    Isn’t it damn good to take the 11000 as cost for another 15 years also, so that in case if the person dies, he can gain 1 crore for his family instead of putting into his basic investment?
    If the person dies, it is a gain otherwise it’s a loss. But i think it’s difficult to gain 1 crore from 11000/year in 15 years. It’s a gamble actually. But life insurance itself is a gamble rite?

    Thanks
    Karthik

    1. Ramesh says:

      Check again the difference between taking a term insurance policy for 30 year old for a period of 25 years, 30 years and 35 years. The premium amounts are vastly different. By taking a longer term, you are effectively paying a much higher amount from the start.

      check it out and then analyse if that higher amount is justified.

  13. Karthik says:

    Thanks Ashal, I was looking for a suitable answer for this recommendation other than financial planning/freedom thing.
    Of course, insurance is an expense. That’s why i had told in one of my previous comments that a person can prefer taking longer term if he doesn’t have problem in paying additional increase in premium. In the end, it’s one’s own decision to assume the cost or not.
    I agree to your recommendations/suggestions you provide to other people regarding various terms. So I thought you had some particular reason or additional insight in strongly disagreeing to this which I am overlooking other than the financial freedom/cost.

  14. Karthik says:

    Hi Ashal,

    Again and again I m telling you that I understand that person should do his financial planning and should have complete all his financial liabilities. I am not denying that. This should not be the sole reason for not getting the longer term.

    As you strongly disagree, I am asking you whether there is any other reason for not having longer term.

    Earlier the age of retirement was 58, now it is 60. In 20 years time, it may be increased may be because of good medical facilities and better lifestyle.

    And there is a negative vote πŸ™‚ I sincerely hope that person answer my question or provide his/her views.

    Thanks
    Karthik

    1. Dear Karthik, if a person is managing his investment properly by the age of 50-55, the major part of liabilities should be covered from the generated wealth. From this point onwards, the prem. of a term cover can be directed towards basic investment instead of risk protection.

      Insurance to me is a cost & when there is no need of insurance, why should I pay that cost? As simple as that.

      By the way, I’m not the person who voted negatively. πŸ™‚

      Thanks

      Ashal

  15. Karthik says:

    Dear Ashal,

    I understand the need of insurance which is to cover the financial risk. The money could be used my son or daughter. Yeah.. they happen to get it when I die. But that’s the whole point of life insurance too. Who knows, 1 Crore may become a small amount after 40 yrs. But anyhow, it’s also money rite?

    Let me know, other than this financial freedom/attaining goals, is there anything wrong going for life insurance until 75 yrs?

    Your question of no death until 80-85 is the exactly the same thing which i mean. Feel the same way as if you have taken a policy until 60 yrs if you don’t die before 75. But there are more possibilities to die after 60 than before 60.

    What if I cannot achieve my goal on the 60th year? what if i need another 5 yrs? It’s a rhetoric question as you could answer me the same way like i did for the your 80-85 yr question.

    It’s a gamble of your death. Take the gamble as there is nothing to lose except for a minuscule premium increase.

    So, let me know if there any other thing which is wrong in going for longer term apart from financial freedom/attaining goals part.

    Thanks
    Karthik

    1. Dear Karthik, if a person can not complete his financial liabilities till age 55-60 i.e. before retirement, then he should seriously think for his financial behavior.

      Thanks

      Ashal

  16. Dear Kartik & Dear Gaurava, Both of you ‘ll be agree that the primary aim of Term insurance is to cover the financial risk of your family that may occur due to your death before completing all the goals of your life. Now after age 50-55-58-60, once all the goals are over, there is no need to go for Cover. You are any how planning to get return in the form of Sum Assured if the death occurs after age 60 but before the end of term of this long term plan.

    Well, what ‘ll you people do if the death does not happens at all till age 80-85 due to medical advancement?

    Thanks

    Ashal

  17. gaurava says:

    Even i have the same feeling as Karthik is saying.. even if I am financially independent at some stage in life.. what’s wrong in having a long time term insurance. After all It’s a nice bet after achieving financial NIRVANA.. just some 8 -10K investment and a nearly assured big return to family (of course not to you πŸ™‚ ). That’s why I was looking for longest possible term insurance.

    On aegon religere website i found they are offereing 40Yrs or upto 75 yrs age as well.
    https://buyonline.aegonreligare.com/iTerm-plan.asp?key=C2G1BRANDEXACTreligareRELIGARETERMINSURANCEPLAN&gclid=CNuf_oL5xbICFYWo4Aod5RoAXw#iterm-calculator

    anyone would like to comment on that?

  18. Karthik says:

    Sorry Ashal.. that was a typo.. 11000(rounded value with all riders enabled) per year..

    My view is that, there is nothing wrong in going for a higher term until 70/75 yrs age or 40/45 term period. The insured is not seeing the benefit, but at least it will be added as a wealth to his family. People who have 5 or 10 crores as networth, doesn’t stop earning as they have achieved financial freedom. They will try to multiply what they have. Moreover, whatever a guy has earned by disciplined investing, he could lose everything at 60 yrs old which is still a risk which is the pure idea of term insurance also. So I find nothing wrong in going for higher term if one can afford the high premium(negligible now with offline vs online plans) .

  19. Karthik says:

    Lets say that premium is 11000 per month for an religare online term plan of 1 Crore SA for 45Y(upto 75 yr max). So even if the amount is invested in an instrument which gives 6% return.. my compounded return will be 24.8 Lakhs. For that, if the person dies, his family gets 1 Crore which is not a small amount.

    I understand, that people should have good financial behaviour and achieve financial freedom earlier. But what is the issue if the family gets the 1 Crore SA after the death. It’s additional amount rite? It’s also money rite?

    Let them get it. Getting that money won’t mean that the person don’t have better financial planning nor he doesn’t have money. It’s just taking advantage of the options offered. If some insurance company is providing that, it’s their risk which will be taken care of their reinsurers. If more people gets this higher term, automatically they will reduce their term in their policies for new policies as they will not be able to pay to everyone who die

    1. Dear Karthik, 11K mly translates into 1.32L Rs. yly prem.? From where did you take these figures?

      Also I’m unable to understand the reply given by you. Can you simplify a bit for me?

      Thanks

      Ashal

  20. Dear Gaurava, Aegon Religare, Bharti AXA are now offering cover for 35Y which translates into for you age 64-65 roughly. & 62-63 for your wife. if by this time, your financial liabilities ‘ll not be over, you should look into your financial behavior for the reasons for not achieving financial ‘NIRVANA’.

    Think over it.

    Thanks

    Ashal

  21. Life expectancy in India is in Mid 60s (67 I think for Men, 65 for women) and a 45 year insurance plan taken by a 30 year old has a very high likelihood that the claim is paid out. If insurer pays out claim for everyone (or a significant number) they will have to walk away from business within 1 generation.

    In the US for example life expectancy is in High seventies. You can easily get insured for upto 70 years. It depends for each country.

    If our living standards go up and there are far fewer deaths due to hygiene/starvation/malnutrition etc. (which pull down the average age in India) and life expectancy grows then insurance companies will be willing to insure people longer!

  22. Harsh Puri says:

    Correction, I meant the longest cover term available.

  23. Harsh Puri says:

    Well LIC Amulya Jeevan insures you for maximum of 35 years. I have not see any other provide better this.

    I guess with IRDA becoming really stringent it should not matter which provider you insure with, but still check out the claim settlement ratios, I think LIC and HDFC life top the charts there.

  24. BanyanFA says:

    Gaurav,
    Generally a term of 30 years is sufficient in most cases. It is good to be insured (and not over insured). You would notice that by the time you would 50, you would have taken care of your liabilities and have built a sufficient capital base to take care of your livelihood and dependents. May be you would not require a term insurance after that considering you may classify yourself as financially independent at that time.

    However, if you still need term insurance, you can always have it later.

    Regards
    Banyan Financial Advisors (BFA)

    1. Harsh Puri says:

      BanyanFA,

      I would err on the side on caution and take the maximum cover possible.

      If at some later point you feel you are over-insured and you have achieved all your goals, you can always stop paying the premium or go for another plan with less cover.

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