Retirement planning & life insurance after 50: Can my parents still get a policy, annuity plan for investments?

My parents are in their early 50s and currently do not have any life insurance coverage. Are there life insurance policies available for individuals in this age group? What options should I consider to provide them with financial security as they approach retirement, and how can life insurance and other financial products like annuities play a role in their overall financial plan?

Reply by Vaibhav Kumar, SVP & Head of Product Management and E-commerce Channel, Max Life Insurance

Life insurance acts as a financial shield for your loved ones in the face of life's uncertainties, particularly when the primary breadwinner passes away. For parents in their early 50s, it's common to still be actively employed while their children are finishing their education or starting their careers.

Even if the children are approaching self-sufficiency, a significant expense like their wedding might be on the horizon. Thankfully, life insurance options are available to cater to everyone's needs. The amount of coverage and the premium cost will depend on the parents' financial health and medical history.

Consider term life insurance, which offers a substantial death benefit at a relatively affordable premium for a specific period, typically 10 to 30 years. This can ensure your children have the financial resources to cover outstanding debts, wedding expenses, or continue their education if the unthinkable happens.

However, an even more pressing concern for this couple should be their retirement planning. As they approach retirement age, a deferred annuity plan could be a strategic solution. This plan allows them to make consistent premium payments for a set period.

Once that period ends, they'll start receiving a guaranteed stream of income, known as an annuity, for the rest of their lives. This provides them with a steady source of income to maintain their desired lifestyle in retirement, without depleting their savings.

A particularly well-suited option for them would be a joint life annuity with a return of premium feature. This type of plan ensures they receive a fixed income payout as long as at least one parent is alive. Upon the passing of both parents, the total amount of premium they paid throughout the plan will be returned to their designated beneficiaries. This serves a dual purpose: it guarantees financial security throughout their retirement, and any remaining funds can act as a legacy for their children, helping them with future needs or goals.

By carefully considering both term life insurance and a deferred annuity plan, this couple can create a comprehensive financial safety net. Life insurance protects their children from financial hardship in case of their passing, while the annuity plan ensures a steady income stream for their golden years. This holistic approach allows them to retire with peace of mind, knowing their loved ones are financially secure throughout life's stages.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)