Insurance for Senior Citizens- Is it worth it?

TomorrowMakers ™

Insurance for Senior Citizens- Is it worth it?

08 July 2017
Think senior citizens should invest in insurance even after they retire? Here is what you need to know.
 
 

When Mr Verma was 35 years old, he was very organised with his finances and investments. He had a wife and a young son to support. He bought various kinds of insurance, including a life plan and a health plan.

Fast forward to today. As a 67-year-old retired grandfather, Mr Verma is unsure what to do with his retirement money. Should he get some insurance plans? Or, should he get a few fixed deposits in his name? Or maybe invest in his granddaughter’s education? His options are many but he cannot decide on the right one.

You too may wonder whether it is wise for seniors to get insurance. So, let us look at the best investments for senior citizens.

Health insurance for senior citizens

A senior citizen pays about anywhere between Rs. 20,000 to Rs. 30,000 each year in health insurance premiums, depending on the health of the insured and policy benefits. This is a huge amount. So, before you buy a health plan, assess your annual medical bills and required health care.

However, health insurance is not only important if you have high medical bills. With age, you are more likely to require specific medical care. You also become prone to serious illnesses or ailments, for which treatment could be expensive. This can eat into your retirement savings. A suitable health insurance policy can provide financial cover in these situations, so you don’t have to worry about it. Additionally, certain policies provide routine health check-ups, which can help you keep a track of your health.

There are many other ways to invest your hard-earned money as well. Many of these include low-risk investments that offer a decent rate of interest. Here are some of the best investment options for senior citizens:

  • Senior Citizen Saving Scheme
  • Fixed Deposit
  • Post Office Term Deposit
  • National Savings Certificate
  • Monthly Income Plans (by Mutual Funds)

Another option is Equity Linked Savings Scheme (ELSS). However, this investment instrument carries slightly higher risk, as compared to the others.

If your health is fragile and you need medical care often, make sure you have a comprehensive health plan that even covers major critical illnesses such as Cancer and Heart Disease.

Even if you are healthy right now, it is best to plan for unforeseen medical emergencies well in advance. Did you know that heart attacks kill one person every 33 seconds in India? And that air pollution causes two Indians to die every minute?

With numbers like these, it becomes vital that you plan for medical emergencies, because an unfortunate incident could strike anytime.

On the other hand, if you are healthy and have no history of critical or chronic diseases, such as diabetes or heart conditions, and do not want to spend on health insurance, you can consider investing in various other financial products.

However, ensure your investments are large enough to cover both, health costs (during a medical emergency or future problems), as well as your present and future regular expenses.

Related: Health insurance for dummies: 7 essential questions and answers

Life insurance for senior citizens

Most senior citizens pay off their debt at the time of retirement. By then, their children tend to be established too. So, you may wonder whether a retiree needs to continue with a life insurance plan at all. If you too have been considering what to do, look at your current financial scenario. You must continue with the life insurance plan if:

  • You still have a debt: Whether it is an unpaid home loan or a business loan, you need to pay off any kind of ongoing debt. Suppose you discontinue your life plan and something happens to you, your aged spouse or children may then have to take the responsibility of paying off the debt.

Secret Sauce 4 time-tested tips to help you get out of debt in 2017

  • You have dependents: Are your parents still living with you? Do you have a partner or child to support? Then you must carry on with your life plan even after you retire.
    Secret Sauce:  4 Reasons you need insurance even if you don’t have dependants
  • Leave behind a legacy: If you have children and want to leave behind a legacy for them, a life insurance policy makes sense. This way, should anything happen to you, your nominees will be entitled to a large pay-out. However, if you don’t have dependants or children, a life insurance policy would not be the best option.

Secret Sauce: Estate planning: 10 things to do before you die

If you do not have any such liabilities, you can reconsider continuing your life insurance plan after retirement.

Travel insurance for senior citizens

Travel insurance is an absolute must. Healthcare costs overseas are exorbitant. Suppose you travel without insurance and need medical care abroad, you may end up losing a large chunk of the money you saved up all these years. So, be cautious and never travel without a travel insurance plan.

Conclusion

As you can see, health and life insurance might not be a must-have for all senior citizens. The requirements of these policies differ from one person to the next. So, speak to your financial advisor to understand all your insurance and investment options. Then opt for those that are most suitable for you.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment, insurance, tax or legal advice. You are encouraged to separately obtain independent advice when making decisions in these areas.

 
 

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