Tata AIA Life Insurance has observed a significant shift in the way customers are purchasing term insurance. According to Sujeet Kothare, Executive Vice President of the company, there has been a 10% increase in new customers opting for term plans with coverage below the age of 70. This trend indicates that policyholders are becoming more aware of the true purpose of term insurance, which is to replace income and provide financial protection during the working years.
Financial planners agree that term insurance is most effective when it covers the years between 25 and 60-70, when individuals are earning and supporting dependents. During this phase, families rely on one or more incomes to meet obligations such as loan repayments, children’s education, and daily living costs. However, as individuals near retirement, the need for income protection diminishes, and continuing term cover beyond this point may result in paying higher premiums for unnecessary protection.
Experts emphasize that there is no one-size-fits-all approach, and the decision to opt for term insurance should be based on individual financial responsibilities rather than age alone. 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.
The trend observed by Tata AIA suggests that buyers are moving towards more personalized and efficient financial planning, using term insurance where it matters most and letting it go when it doesn’t. This shift reflects a growing understanding of the core function of term insurance and a more informed approach to financial planning. By aligning their coverage with their working years, individuals can ensure that they have adequate protection during the most critical phases of their lives, while also avoiding unnecessary premiums. Overall, this trend indicates a positive shift towards more informed and effective financial planning.