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Should You Buy a Term Plan After 40?

The best way to give your family the financial cushion even in your absence is to purchase a robust term plan. Read more about why you must buy a term plan even after 40.

  • 3,365 Views | Updated on: Feb 28, 2024

In India, for most people, the 40s are the most financially productive years of their life. You may be comfortably placed in your profession. You may draw a decent salary to meet your necessities and spare some amount towards savings. Your children may be nearing completion of education and just about to start their careers, and the EMIs are taken care of. Life may look settled and peaceful. But what will happen to your family if you are no longer there one day?

Key takeaways

  • A term insurance plan provides a lump sum payout to your beneficiaries.
  • In your 40s, you can secure a substantial coverage amount for a relatively low premium.
  • A term insurance plan can supplement your existing coverage.
  • By getting a term insurance plan in your 40s, you can secure coverage while you are still in good health.

Let us be honest: while you may do your best to ensure that your family has the best of material comfort, most of these plans revolve around ‘you’ as an individual. And the sad truth is that life can be uncertain. Luckily, it is never too late to secure your family’s financial future. And the best way to give your family the financial cushion even in your absence is to purchase a robust term plan.

In the event of your untimely demise, your family will receive the death benefit from the insurance company, and they can use the amount to meet their regular expenses and pay off the debts (if any). However, if you have not purchased term insurance because you think being in your 40s is too late, you are only putting the family’s financial position at risk.

Why Must You Buy a Term Plan Even After 40?

While many individuals believe that buying life insurance is something you do in your younger years, it is essential to understand that purchasing a term plan after the age of 40 is still a wise and responsible decision.

Affordable Premium

Term insurance has the most affordable premium as compared to other insurance policies available in the market. And, while you may be in your 40s, you may still be healthier than someone who is in their 50s or 60s. So, the earlier you purchase, the better. You can leverage time benefits and get coverage at an affordable premium.

Get Insurance Against Debt

During your 40s, it is not uncommon to have some financial responsibilities such as a mortgage, credit card debt, or an outstanding vehicle loan. Repaying these obligations can often consume a substantial portion of your income. Now, picture a scenario where, unfortunately, your family loses you, and with your passing comes the loss of your income. As they grapple with the emotional weight of your absence, they also find themselves shouldering the burden of repaying these financial commitments.

To avoid such an unfortunate situation befalling your family, it is better to purchase a high-value term policy. The death benefit will act as insurance against the debts; they can use the payout to repay the outstanding amount.

Add-on Cover Benefits

When you buy a term plan, you have the flexibility to choose an additional coverage option, which is known as a rider or add-on. The riders extend the scope of your regular term plan’s coverage and offer protection against specific risks that are not covered under the main policy.

But remember, when you buy an add-cover, your premium increases. So, you must be prudent with your choice of add-on cover. For example, if you work in a high-risk environment, it makes sense to buy an accidental cover.

Tax-Saving

Tax saving is a critical aspect of financial planning. And, whether you are in your 40s or 50s, you would want to maximize your tax savings, right? When you purchase a term insurance plan, you are eligible to enjoy a host of tax benefits. The premium you pay is tax-deductible up to a maximum limit of ₹1.5 lakhs in a financial year under Section 80C of the Indian Income Tax Act.

Additionally, the death benefit that your family member may receive is entirely tax-free under Section 10(10D) of the IT Act.

How a Term Insurance Plan Can Benefit You in Your 40s?

Whether you are concerned about safeguarding your loved ones’ future or seeking an affordable and flexible coverage option, a term plan can be a valuable tool in your financial planning arsenal. Here are some of the benefits of term insurance.

Financial Security for Your Family

By the time you reach your 40s, you may have a spouse and children who depend on your income. In the unfortunate event of your untimely demise, a term insurance plan provides a lump sum payout to your beneficiaries. This financial cushion can help cover daily expenses, outstanding debts, children’s education, and even the mortgage, ensuring that your family’s financial well-being is protected.

Flexibility

Term insurance plans offer flexibility in terms of coverage duration. You can choose a policy term that aligns with your specific needs. This flexibility allows you to customize your coverage to match your financial goals and responsibilities. For example, if you have young children, you might opt for a 20-year term to cover their education expenses.

Supplemental Coverage

In your 40s, you may already have some life insurance coverage, such as a policy provided by your employer. However, these policies are often insufficient to meet your family’s financial needs in the long term. A term insurance plan can supplement your existing coverage, providing an extra layer of protection and peace of mind.

Health Considerations

As you age, your health may become a factor in securing insurance coverage. Health issues can impact your insurance and the premiums you are offered. By getting a term insurance plan in your 40s, you can secure coverage while you are still in good health and avoid potential difficulties in obtaining insurance later in life.

Final Words!

While it is advisable to purchase a term insurance plan at a younger age, buying one after 40 can still be a wise decision. The key is to assess your individual circumstances, health, and financial stability to determine the best course of action. Ultimately, the goal of purchasing term insurance at any age is to provide financial security and peace of mind for your loved ones. So, if you are in your 40s and have not secured a term plan yet, it is not too late to consider it as a responsible step toward safeguarding your family’s future.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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