Life insurance is important especially when you have dependents. Should you pass away, you don’t want to pass the financial burden of hospital bills, funeral costs, and debts on them.
Therefore, you need to choose a life insurance company and a policy that is suitable for you and pay your premiums. In this way, if you die, your family will receive a lump sum payment, which they can use to support themselves, ensuring that you can still take care of your loved ones after you’re gone.
It is never too late for life insurance even at 65 or 70 years of age. According to data collected by the Center for Disease Control and Prevention (CDC), once you reach the age of 65, you can expect to live another 19.3 years.
Term and permanent life insurance life policies are available to older people regardless of age. However, for term life insurance, there is a cut-off point which we shall look at later.
Which Seniors Need To Buy Life Insurance Coverage?
This is dependent on the individual and whether it is necessary for them. As you get older, your financial responsibilities diminish, in which case if you are living comfortably and have no dependents, life insurance may not be necessary.
Here are reasons to buy a life insurance policy:
- Your current policy is about to expire.
- To offset loss of retirement income upon a spouse’s death.
- To protect your estate.
- To pay off debts such as credit card, mortgage, and personal loans after death.
- To continue supporting a disabled dependent.
- To gift your children and grandchildren financially.
- To have the opportunity to spend some of your money while alive but still leaving some to your children.
- To leave money to a cause close to your heart (charity, foundation, church, or school).
- To unburden your family from paying expensive medical and funeral expenses.
- To replace social security income for a spouse.
Life insurance is not required when:
- Your funeral expenses are already covered.
- You have sufficient money put away for your retirement.
- Your children are financially independent.
- You have cleared any outstanding debts.
- You have long-term care insurance.
Types Of Insurance
1. Term Insurance
Main features of a term life insurance policy:
- You are covered for only a set number of years. If you have a policy that covers 15 years, your family will receive a payout if you die within those 15 years; however, you must have been paying your premiums. Once the 15 years are up, you are no longer covered.
- It is the most affordable life insurance policy.
- It only pays death benefits.
- Your premium payments remain the same throughout the duration of your policy.
- You can change to a permanent life insurance of equal amount without taking a medical exam. This is advantageous to the senior since as you age, your health declines.
- It has a cut-off point which in most cases is 90. If your family has been known to live well into their 90s then this is not the policy for you.
- In the event it expires, you have the option of continuing to pay the premium (until you are 90) but at a much higher rate. This cost increases every year.
2. Whole Of Life Insurance
- It has no expiry date.
- Compared to term life insurance the premiums are higher.
It is recommended for seniors who have a substantial income, own a large estate, and require liquidity, as well as those who have maxed out their IRA or 401(K).
If you do not want to pay very high premiums, then structure your policy in a way that it does not build up much cash values. Always speak to an insurance agent to help you figure this out.
3. Final Expense Life Insurance
It is the most popular insurance cover for seniors. It is basically whole life insurance with lower death benefits ($2000–$25,000). It is also known as burial insurance, simplified issue life insurance or guaranteed issue life insurance.
It is recommended for seniors who have significant life-threatening conditions and for those who require minimal coverage. The primary intention of this insurance is to pay any small debts such as medical bills and to prepay for funeral expenses.
You can assign it to a funeral home of your choice where once you die, all your costs are catered for. Relieving your family of this burden is good.
Studies show that the average costs for a basic funeral are $7181.This caters for embalming, transferring, viewing, burial and service fees. With other extra expenditure, the cost could go up to $25,000 or more.
If you are still quite healthy and are looking for a way to cover your final expense, opt for a term life insurance since a final expense insurance costs more.
4. Guaranteed Universal Life Insurance
This is permanent life coverage. It is very often mistaken for a whole life insurance; however, they are very different.
- It has a fixed premium that lasts until 121 years (this is adjustable).
- Contrary to whole life insurance, this does not build up cash.
- It is the cheapest permanent life insurance.
If you still require a significant amount for your senior years but not on a long-term basis, consider pairing guaranteed universal life insurance with term insurance this way you can cater to both your permanent and temporary needs.
5. Guaranteed, Modified Or Graded Death Benefit Policy
This type of coverage is similar to final expense life insurance. The main difference is that, with graded death benefit insurance, the amount paid out is dependent on when and why you die while this is not considered in final expense policy.
- It is open to anyone regardless of age or state of health.
- The highest coverage you can buy is $100,000.
- It takes 2–3 years for the coverage to take effect. If you die within this time, your family will only get a refund of your premiums. Then they receive the full death benefit. After the 2–3 year period, you have entitled to full benefits whether your death is accidental or not.
This insurance is ideal for people with serious health problems. Even if you die within the first two or three years, your family will still receive the premiums with 4- to 10-percent interest.
Ensure You Get The Best Life Insurance Rates
Here are some approaches you can take to ensure that you get the best life insurance rates:
- First of all, be certain that you need insurance and be clear on how much you will need.
- The cost of your premiums is to a huge extent determined by your health status. To ensure you get the best rates, work towards being at your healthiest. This involves exercise, eating healthy to lower your cholesterol and blood pressure, and quitting smoking (if you are a smoker). These steps will save you money.
- Take your time and shop carefully. There are different insurance companies with different rates and different ways of rating clients.
- Always speak to an independent life insurance agent who will advise you based on your needs and help you save money.
- Compare quotes, either by researching online sites or through an independent agent who can easily find several quotes for you and compare them with you. These independent agents work for you and not for an insurance company so they are bound to advise you correctly. Another factor is that, unlike you, they have access to multiple insurance companies and a wealth of experience on what works and what does not.
- Buy sooner—the longer you wait, the more it will cost you.
- Pay your premium payments in a lump sum as opposed to paying monthly. This saves you paying for monthly administrative costs
- Do not over insure yourself—buy only what you need. Consider exactly where your needs lie and find a policy that will cater to them. Remember, the higher the face value of a policy, the more it costs.
- Consider pairing up policies to cater to your exact needs instead of one big policy that doesn’t properly suit you. It is it not only cheaper, but you can cancel when you no longer need the coverage. For example, if you still require a significant amount for your senior years but not on a long-term basis, consider pairing guaranteed universal life insurance with term insurance this way you can cater to both your permanent and temporary needs.
- It is also advisable to get the coverage through a group for instance through work. If you do not have this at your workplace yet, you can speak to your boss about possibly introducing it.
- Research extensively and get plenty of quotes. The more you know the higher chances of making a smart decision. The great news is that it does not cost you to sit down at your computer and do this research. Therefore, take advantage of this unique resource which is the technology. You can also visit different insurance offices physically if that is convenient for you. A physical meeting is better than a phone call.
- Do not be influenced to take a policy because your friends or family member used it. Always think about your unique individual needs and use that to guide you.
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The cost of your premiums is, to a huge extent, determined by your health status. To ensure you get the best rates, work towards being at your healthiest.
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