Why Pay Term Insurance Premiums Until the Age of 60?

Paying term insurance premiums until age 60 is a sound strategic decision, especially if you enter the later stages of your career. For many policyholders in India, term insurance coverage up to this age is sought for myriad reasons, including for tax benefits or financial security.

Here, we will explore why paying term insurance premiums till you are 60 years old is a wise choice, the advantages it brings, and the risks of carrying premiums beyond this point.

Payment of Term Insurance Premiums During Working Years

Most people are in prime working years till 60, which is one of the main reasons to pay term insurance premiums till 60. This makes it easier to handle the financial burden of the premium by having the ability to earn a reliable income. Here’s why:

• Steady Income: It is easier to budget for premium insurance during your working years when you have a regular salary.
• Employer Benefits: If your employer has health care benefits, like medical, your out-of-pocket expenses will also be lower, which allows you to dedicate more of your funds to term insurance premiums.
• Tax Efficiency: While still active, you can maximise tax benefits on premium payments (discussed below).
• Better Health Condition: Paying premiums during your working years is more manageable because health conditions tend to be better, which can reduce premium amounts.

When you are 60, you will be exiting your professional career. This is the perfect time to stop paying premiums and start banking the benefits of your policy without worrying about premiums after retirement.

When you reach 60, you will probably be winding down your professional career. This makes it the ideal time to stop paying premiums and just bank the benefits of your policy without worrying about paying premiums after retirement.

No Financial Worries After Retirement

Retirement is when most individuals want to relax and enjoy the fruits of their labour without worrying about finances. The term insurance premium is paid as per your term until retirement, and once you retire, you won’t have to worry about any additional expenses related to your policy.

• Stable Coverage: Your family is financially protected from further payment requirements, and your policy remains in force.
• Retirement Savings: Instead of paying for insurance premiums, you can use your retirement savings to live off.
• Peace of Mind: Knowing that your loved ones are financially secure allows you to enjoy a stress-free retirement.

The idea is to plan to pay for your term insurance until you are 60, which ensures coverage without the stress of continued premium payments in later years.

Avoid Dependence on Family in Later Years

Remaining financially independent as we age is a goal for many people. Continuing to pay term insurance premiums after 60 could become a burden, especially if your income reduces or stops. This is where paying till 60 plays a crucial role:

• Financial Independence: Paying your premiums during your working years reduces the chances that you will need your children or other family members to pay your premiums.
• Avoid Burdening Children: Many elderly people in India also do not wish to ask their children to support them financially. Paying off your premiums until 60 ensures you do not become a financial liability.
• Retain Your Dignity: You can plan and maintain independence in retirement without unnecessary financial dependence on others.

Tax Benefits of Paying Premiums

One of the major benefits of buying term insurance premiums until the age of 60 in India is that you are subjected to tax benefits under Section 80C of the Income Tax Act. Here are the main benefits:

• Deduction on Premium Payments: The premiums paid for term insurance can be claimed as a deduction up to ₹1.5 lakh, along with your total income.
• Exemptions on Death Benefits: According to Section 10 (10D) of the Income Tax Act, the amount paid as a death benefit to the nominee is tax-exempt.
• Savings on High-Income: Deductions in these cases can lead to significant savings, as most people are in higher tax brackets when working.

By paying term insurance premiums before you turn 60, you can maximise your tax benefits while earning an income.

Flexibility in Coverage

Paying premiums until age 60 also allows you to adjust your coverage as your life circumstances change. For example, if you marry, give birth, or buy a house, you may want to increase or decrease your sum assured.

• Increase Coverage: There might be occasions when you may want to increase your term insurance coverage at key milestones when you have kids.
• Add Riders: To offer greater protection, you can take on riders that enhance your cover, such as critical illness cover or accidental death cover.
• Adjust Premium Frequency: You can adjust the frequency of premium payments (monthly, quarterly or annually) based on your earnings.

This flexibility allows you to tailor your policy to your evolving needs, ensuring that you and your family are adequately protected.

Scenario 1:

Scenario 2:

Easier to Manage During Working Years

Financial Independence After 60

Tax Benefits

Inflation Impact

Avoid Long-Term Financial Strain