You need term insurance only as long as you have financial responsibilities. Usually, people plan to be done with major life events - home loans, children’s weddings, foreign education, etc. before they retire. But this could be a little different for you if you start late in life.  

Based on your current & projected income, savings, and expense patterns, you can estimate an approximate age by which you would create enough wealth to be able to take care of your living expenses & financial liabilities without an active source of income. This is called achieving financial freedom. If this age is expected to be beyond the regular retirement age of 60 to 65 yrs, you might need to push your retirement by a few years and work towards building that corpus that will sustain you after retirement. 

This also means that you’ll need a term insurance cover for a longer duration. Here’s how you can go about buying it.

Buying A Term Insurance Cover Beyond Retirement

1️⃣ Purchase A Long-term Or Ultra Long-term Policy 

Long-term or ultra long-term policies offer you a protective cover for a duration of up to 80, 85 and even 99 years. These term plans are an effective way of buying a life insurance cover long enough to protect all your major goals. They are also the most cost-effective strategies for leaving behind a sizable financial corpus for your family - as it is very less likely that you’d live for so long. 

These plans can offer your family up to an annual ~4% tax-free interest for a term that is as long as 50 years. This return can vary from policy to policy - so, be sure to ask your financial advisor to do an NPV calculation for your specific case, before finalising the plan.

2️⃣Choose The Limited Pay Premium Option

Generally, you’re required to pay the term insurance premiums until the end of the policy term. This means that you’ll have to continue paying your premiums even after you retire if you take a long-term or an ultra long-term policy. 

However, if you want to finish paying off your premiums during your working years and still continue to enjoy a life cover long after you’ve retired, you can select the limited pay option - wherein you only need to pay premiums for a specific period say 10 or 15 years. Instead of having your premiums stretched out till the expiry of your policy, this option also helps to limit your premium payment liabilities to only a few years. 

For instance, you want to buy a term insurance cover upto when you turn 75 years old but you plan to retire by the time you turn 60 - and won’t have a regular income post-retirement. With the limited pay option, you can finish paying off all your premiums in the next 15-20 years while you have an active income. And you won’t have to worry about having any source of income post-retirement.

Summing up!

If you’re planning to purchase a term insurance policy that covers you beyond retirement, you can invest in long-term or ultra-long-term plans and opt for the limited pay option. This will make it easier to prolong your term insurance coverage without having to carry on the financial burden of paying premiums into your post-retirement life.

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