A life insurance policy is an important investment to make to protect the future of your loved ones. What is life insurance? It is a financial product designed to mitigate the financial problems that your dependents may face in the event of your demise. The ideal time to purchase life insurance is during one’s 20s or 30s. The premiums also tend to be lower at this age.
However, this does not mean that one cannot buy life insurance during their 50s. In fact, life insurance is a useful product for people of all ages. If one has not insured their life well into their 50s, then it is better late than never. But buying life insurance at this stage in life comes with its challenges as well.
Challenges of buying life insurance in your 50s
- High premiums
One of the most important determinants of any life insurance plan is the age of the policyholder. If a person is young, for instance, in their 20s or early 30s, they are at a lesser risk of illnesses and accidents. Hence, if a 25-year-old were to add their age to the life insurance premium calculator, the premium would be considerably lower.
On the other hand, an individual who is in their 50s or 60s bears a higher risk of such events. The immune system weakens as one grows older, making aged people more vulnerable to health issues. The insurance company has to bear a high amount of risk in such a situation. Hence, they charge a higher premium for older people.
- Less chance of approval
Though it is rare, some insurance companies may be hesitant to approve the life insurance application for individuals aged 50 years or above. This is especially more likely to happen if the person is already diagnosed with a chronic disease. The reason behind this is the same as mentioned above: the insurer has to bear a high amount of risk.
Why you should buy life insurance even in your 50s
Though it may come with a few challenges, buying life insurance in the 50s is also beneficial in many ways, such as:
- Peace of mind
This particular benefit of buying life insurance plans trumps any other. When you buy life insurance, even in your 50s, you do so to secure the future of your loved ones. Whether or not your children may be independent, you have the peace of mind that they have a financial backup, even when you may not be around.
- Repayment of liabilities
There are chances that you may still have some liabilities pending. If anything were to happen to you, the responsibility to repay those debts and liabilities would befall your spouse and children. This can put immense financial pressure on them and add to an already stressed environment. The sum assured from a life insurance plan can help immensely in such a scenario.
It is crucial that you choose the right sum assured amount that will support your loved ones. Using online tools like the human life value calculator and life insurance premium calculator can assist you in this regard.
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- Leaving a legacy
Even if you no longer have financial dependents, a life insurance policy can still help to leave a legacy for your children and grandchildren. They may not need the money from your life insurance plan but receiving it in the form of a legacy can be a heartening gesture.
- Tax benefits
Paying the premium for your life insurance plans can help you save tax to a great degree. As per Section 80C of the Income Tax Act, 1961, the premiums of a life plan can be used to claim tax deductions of up to Rs 1.5 lakhs. The death benefit pay-out and the maturity benefit pay-out are also tax exempted, provided the terms and conditions are met.
What type of life insurance to buy?
Ideally, someone in their 50s should buy term life or whole life insurance, since these are pure life protection covers. Others may have a savings or investment element attached to the plan, which may or may not serve your goals. The premiums for the latter type of plan may also be high. Term life or whole life insurance plans usually have lower premiums as compared to other types of plans.
We hope this article has helped you better understand what the importance of life insurance is even during one’s 50s.