Until a few years ago, most insurance policies were designed with a younger audience in mind. Hence, most policies offered a maximum tenure of about 30-35 years, with the assumption that holders would need cover only till retirement. Over the past few years, however, some life and non-life insurance companies have started promoting whole-life plans, which extend coverage till the policyholder turns a 100. 

Life insurance is meant to aid dependants financially, in the event of the policyholder's demise. Post-retirement, if you do not have to provide for those who are financially dependent on you, you do not need the protection cover. Given this understanding, the logic behind life insurance with longer maturities is not very clear. So, what is the real purpose in buying a longer-maturity life plan? 

The need for a protection plan after retirement is limited. However, a term plan bought at an early age which covers you up to the age of 70 or 75 years can be fairly competitive, since you lock in a low annual premium. At the same time, whole-life plans that have a savings component, and thus a cash value associated with them, can be a useful tool for your longer-term estate or inheritance planning. It is important to understand the nuances and the underlying needs these plans fulfil when evaluating them. 

With a large number of nuclear families emerging, as well as rising life expectancy and cases of lifestyle diseases, there is now the possibility of a large number of people nearing retirement with inadequate life insurance to support their spouse after their demise. Such plans are designed to secure the next-in-line, so that they are not left dependent on the next generation. 

There could be those who desire an income even after their working years. It is for this reason that whole-life plans combined with pension are such a hit. While on the face of it these plans seem attractive, at 5-6 per cent the effective returns offered by these policies are pretty low. Pension policies from various companies also fall in this category. Such plans will also work for those who have commitments beyond their retired years, and who continue to pursue employment well beyond their retirement due to financial compulsions. In addition, longer-tenure term plans may help those taking an insurance policy very late in life, when they are past the maximum entry age for other policies. The premium for these policies, however, would be very high. That apart, you need to assess whether the sum assured for the product is sufficient to meet your requirements. You also need to take into account that the features of all longer-tenure plans are not similar. 

Health insurance that offers cover for a longer term is understandable, since it offers comfort at a time when health concerns and health costs are mounting. In comparison, life plans with longer tenures/maturity periods are niche products designed to fulfil specific needs of policyholders. Therefore, they are not a must-have for every individual. A policy purely to protect the sole income-earning capacity of the individual may prove to be expensive as the individual’s age advances. In such a case, it would be advisable for individuals to weigh the options, and see what works best for them in terms of the cost for income protection, for example, the likelihood of dependants beginning to earn their own income, the cost of insuring life for a short term vis-a-vis the benefits, etc.