Bhubaneswar: Term insurance has long been considered the bedrock of financial security—offering pure protection without the frills of savings or investment. Unlike traditional life insurance plans, which blend coverage with wealth-building, term insurance is refreshingly simple: if the policyholder passes away during the policy term, their family receives a lump sum payout. That’s it. No bonuses, no returns—just uncompromised protection.
But as financial awareness grows, a more nuanced question is emerging: When is term insurance truly necessary, and how long should one stay covered?
The Role of Term Insurance: Income Replacement, Not Lifelong Cover
Financial planners are aligned on one thing—term insurance is not meant to be forever. Its primary purpose is income replacement during a person’s active earning years. If a family depends on your income, term insurance ensures they’re not left financially vulnerable in your absence. It helps cover everything from home loans and EMIs to education costs and daily living expenses.
For most individuals, this need peaks between the age of 25 and 60–70, when liabilities are high and income generation is at its prime. During this window, term insurance acts as a financial safety net—one that can help maintain a family’s lifestyle, goals, and peace of mind.
When Protection Becomes Less Critical
However, once you approach retirement—typically beyond age 60 or 70—the need for term insurance often diminishes. Why?
- Home loans and other debts are likely repaid
- Children may be financially independent
- A retirement corpus may already be in place
- Daily expenses are better planned and stabilized
In such scenarios, it makes more sense to shift focus to retirement income, healthcare, and wealth preservation than to continue paying high premiums for term coverage that may no longer be essential.
One Size Doesn’t Fit All
Still, there’s no one-size-fits-all solution. A self-employed professional may continue earning well past 60. Some may have late-life responsibilities—like dependent parents or young children born later in life. For them, extending coverage beyond the traditional retirement age could be justified.
The key is personalization: aligning the duration of the policy with your financial dependents and liabilities, not with a general rule.
A Shift Toward Smarter Financial Planning
The insurance industry is starting to reflect this change in thinking. Today, the customer is more aware, digitally savvy and weighs in the claim experience as well for the brand he/she trusts.
Kamal Bhardwaj, Chief Bancassurance Officer, Tata AIA Life Insurance, , shared an interesting insight:
“At Tata AIA, we’re observing a shift in the perception of term insurance among consumers. Increasingly, consumers are aligning their policy tenure with their active income-earning years, understanding that the core purpose of term insurance is income replacement—not lifelong coverage or legacy creation. In recent months, we’ve seen a 10% uptick in new customers choosing term plans that offer coverage only up to age 70 or below. This trend reflects a growing awareness and preference for smarter, more life stage-aligned financial planning. “
He adds,
“We must guide this shift as insurers, not only by offering products, but by helping our customers understand when protection cover is most important, and when it’s time to pivot to income and health-focused solutions for a well-planned retirement. Similarly, the customer needs a simple product covering their need, providing exceptional onboarding experience and a dependable service for the times when it is needed the most.”
The Bottom Line
Term insurance isn’t about covering your entire life. And like any financial tool, its value lies in how thoughtfully it’s used.
