Term insurance is primarily designed to replace income, protecting families from financial hardship if the policyholder dies during their income-earning years. This coverage typically includes debts such as home loans, education expenses, and daily living costs.
Tata AIA Life Insurance has observed a significant change in how customers are purchasing term insurance. According to the company, there’s been a notable shift towards aligning coverage with working years rather than opting for lifelong protection. “We’ve seen a 10% increase in new customers choosing term plans with coverage ending below age 70 in recent months,” stated Sujeet Kothare, Executive Vice President at Tata AIA Life Insurance. “This indicates a strong move towards smarter, more life-stage appropriate planning.”
Kothare emphasized that policyholders are recognizing that term insurance is meant to replace income, not serve as a legacy or retirement tool. “As insurers, our role is to help customers understand when insurance is most relevant and when to shift towards income and health-focused solutions,” he added.
Understanding Term Insurance Needs
Financial planners agree that term policies are most effective when they cover the years during which an individual earns and supports dependents. The need for term insurance is typically highest between ages 25 and 60-70 when families rely on one or more incomes to meet financial obligations. Once nearing retirement, the need for income protection often diminishes as loans are repaid, children become financially independent, and retirement savings take over.
Matching Policy Duration to Financial Responsibilities
Experts stress that there’s no one-size-fits-all formula for term insurance. The key is matching policy duration with financial responsibilities rather than age alone. Individuals 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, efficient financial planning—using term insurance where it matters most and letting it go when it doesn’t. This approach allows for better financial management and more appropriate coverage throughout different life stages.
