Personal Finance

Insurance Uncovered

Rajalakshmi Nirmal | Updated on September 15, 2019

I am covered under the group life insurance policy of my employer. The sum assured is 48 months of salary, which is ₹1.25 lakh a month. This cover with LIC will cease when I retire. I am now 57 and worried that I will lose the cover in three years. Should I take a new one now itself because, after 60, it would become very costly? Can I continue to be covered under the group policy after my retirement?

S Prabhu

Life insurance is for making good the loss in income for the family after an earning member’s demise or to cover the financial liabilities of an individual when he is not around. So, you need a life insurance cover only in the earning years.

Given your age, you may not have a large financial burden now. Home loan/vehicle loan EMIs would already be over. And, after retirement, you may not have any dependants too; so, why bother about a life insurance policy?

However, if you have made up your mind to buy a life insurance cover, you can go ahead. Many insurance companies, including ICICI Prudential, provide life insurance even for those who are 65. But note that the premium would be very high. For ₹60-lakh cover, (which you currently have under the group policy), at your age, a life insurance policy that will cover you for the next 28 years (till you turn 85 — the maximum most insurers offer) will cost ₹1.42 lakh a year as premium. If you take the policy after you turn 60 for cover till 85 years of age, the premium will be ₹1.61 lakh a year.

If you are looking at legacy creation through life insurance, you can consider whole life plans, where you can be covered till 99/100 years. We do not recommend these policies though, as they are basically endowment plans with low returns and high cost. The cost of a policy from ICICI Prudential Life Insurance of sum assured ₹60 lakh at 60, which will cover the individual until he/she turns 99 is ₹1.71 lakh a year. Other whole life plans may be even more expensive.

Group insurance covers cease when an employee retires. You don’t have the option to extend the cover, post-retirement.

At your age, more than life insurance, health insurance is essential. It is suggested that you buy a health insurance policy, if you do not have one already.

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Published on September 15, 2019
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