Do you need term insurance coverage till 100 years?

Introduction

Term Insurance Policies are one of the most popular financial products available. Much of this popularity can be attributed to its affordability, convenient access to the extensive sum assured, the flexibility offered via its riders, and tax benefits (Under Section 80C). Now, such popularity has brought in multiple-term insurance plans with various customisation features and other in-built perks. These plans and their features are meant to cater to the tailored financial requirements of the evolving policyholders.

While such customisations and features are a green flag for a brand’s potential and existing policyholders, for a term insurance policy to be completely value-worthy, you must choose the best combination of perks that cater to your tailored financial goals. This includes choosing the best possible term cover and an ideal term tenure (span during which a term insurance plan stays active).

With term insurance policies, in the case of calculating the term insurance cover and the term tenure, there is no one particular answer. It will be based on your current number of dependents, your retirement age, your and your beneficiary’s current age, monthly/annual expenses, financial liabilities, etc. While calculations of such cover amount and tenure are manageable, thanks to a few free tools, insurers offer more convenient solutions that appeal to the interest of potential policyholders - term insurance policies with coverage till 100 years.

Now, while this seems like an exciting perk, the question is - are such term insurance plans really a good option? Let’s find out!

Should You Opt For Term Insurance Plans Offering 100 Years of Coverage?

When you purchase a term insurance policy, the insurer asks you to choose the sum assured and the tenure. As mentioned above, these two are swayed by a number of factors. However, to streamline this process, term insurers offer you an option to purchase insurance plans with tenure until the policyholder turns 100.

However, such plans come with a set of pros and cons -

A. Advantages of Term Insurance Plans Offering 100 Years of Coverage

Term insurance plans that offer to cover you till you turn 100 have a single advantage -

Term Insurance plans don’t provide the sum assured if the policyholder survives the entire policy tenure. Thus, if the insured opts for tenure till they turn 65 and survive the period, the whole premium and base cover amount are lost.

On the other hand, considering the average life expectancy of the Indian population, the chances of death by the time the insured turns 100 are pretty high. This ensures that with the term insurance plan extending coverage till one turns 100, there is a sure-shot way to receive the sum assured in full.

B. Disadvantages of Term Insurance Plans Offering 100 Years of Coverage

1. High Premiums—The pro/advantage of term insurance plans offering 100 years of coverage makes way for its most significant disadvantage. Since the chances of an insured passing away significantly increase by the age of 100, the risk of payout for an insurer also increases.
   The providers charge higher premiums to safeguard their financial stability. Such higher premiums defy the affordability perk of a term insurance plan and take a sizeable toll on your savings. By this age, since your source of income is comparatively reduced or completely stopped, such high premiums will eat away your savings.
2. Less Number of Dependents - One of the primary reasons for opting for a term insurance plan is to support the dependents financially. Now, by the time you reach 100, most of your dependents will have become economically independent. And if you are considering leaving your term insurance sum assured as a legacy for your children, considering the inflation and the higher premiums that reduced your savings - you won’t be left with much.

Conclusion

Term insurance plans with coverage till you turn 100 may seem temporarily appealing. However, if you take a closer look, you will see that you are losing out more than you plan to save with this policy. We would instead recommend that you seek out the help of an expert to spot the best term insurance policy, calculate the ideal tenure and then, after the end of the tenure, focus significantly on your savings accounts to build the financial legacy that you want to leave for your spouse and/or children.