When a client asks an IFA “till what age should I take a term insurance for” the IFA has to have the brains to rephrase the question.

The correct question is “what happens if I die before my goals are met” -this is what the client is actually asking. The correct answer is “till you have not created a corpus OUT OF EARNED income to meet all your goals”.

So clearly the answer to the question is “you should have term insurance till you finish creating a corpus for meeting all your goals”. Normally for 99% of the working population this is done by age 55. He may have paid off for his parents care, children’s education, and created a corpus for his retirement. If he dies at this stage, there is unlikely to be anybody “financially” worried about his death. Take my case, my family will not miss me financially if I die today. No, I am not yet 60 years of age.

Term insurance pays for the gap between “goal amount” and “net-worth”. So if my “goal amount was Rs. 8 crores when I was 30 years of age” and I had Rs. 50L, I would need a term insurance of Rs. 7.5 crores. As my NW increased, I should reduce my term insurance. Simple no?

Well Hdfc Insurance has a term insurance which allows the sum assured to be REDUCED on a progressive basis. That is exactly what the doctor ordered for you!

Is there a point in having Term Insurance beyond the age of 55 (technically retirement age)? yes for a professional who has given guarantees for say a hospital building, or a CA having bought a new house or office. Yes your term insurance needs for your family are over, but your business could make you take a term insurance for its loan needs.

Term insurance should ONLY be a cover meant to cover your “earning life”. Paying for a cover beyond this makes no sense. However, people do buy beyond this, HOPING to “book profits” ..and they waste the extra premium paid.

This is a rejoinder to an article on how long an insurance should last…by Aarati Krishnan

https://www.primeinvestor.in/until-what-age-should-life-insurance-last/