Tata AIA Life Insurance has observed a significant shift in the way customers are purchasing term insurance. Instead of opting for lifelong protection, more people are choosing term plans that cover them only until they are 70 years old. According to Sujeet Kothare, Executive Vice President of Tata AIA Life Insurance, there has been a 10% increase in new customers selecting term plans with coverage below the age of 70. This trend indicates that customers are becoming more informed and are making smarter, life-stage appropriate planning decisions.
Financial planners agree that term insurance is most effective when it covers the years when an individual is earning and supporting dependents, typically between the ages of 25 and 60-70. During this phase, families rely on one or more incomes to meet financial obligations such as loan repayments, children’s education, and daily living costs. However, once a person nears retirement, the need for income protection diminishes, and continuing term cover beyond this point may result in paying higher premiums for unnecessary protection.
The decision to opt for term insurance is not universal and depends on individual circumstances. Those with extended financial responsibilities, such as dependent parents or young children, may still require term cover later in life. Self-employed individuals with income beyond retirement age may also benefit from longer coverage. Experts emphasize that there is no fixed formula, and the key is to match the policy duration with financial responsibilities rather than age alone.
The trend observed by Tata AIA suggests that buyers are moving towards more personalized and efficient financial planning. They are using term insurance where it matters most and letting it go when it doesn’t. This shift reflects a deeper understanding of the core function of term insurance, which is to replace income, not to serve as a legacy or retirement tool. As insurers, companies like Tata AIA Life Insurance are responsible for helping customers understand when insurance is most relevant and when to pivot towards income and health-focused solutions.