Why Senior Citizens Should Consider Life Insurance Options
Contrary to what most people think, senior citizens can benefit from the right life insurance policy. While a permanent policy may not be the right choice for a senior who is on a fixed income or for one who cannot tolerate the volatility of the stock market, there are plenty of other options available to make sure that surviving family members will have enough to cover final expenses. The cost of the funeral and burial will vary depending on where the senior lives. But, on average, the total cost is now well over $6,000. Therefore, even a relatively inexpensive term policy can be a good choice for a senior citizen who needs to ensure that his or her family won’t be left to pay these expenses.
Different Types of Seniors
For married senior citizens who have mortgage payments, car payments or other types of debt, life insurance is critical to protecting the remaining spouse. If the surviving spouse does not have another source of income and will have to pay these debts along with other day-to-day living expenses from social security benefits or a pension, the death of a spouse can lead to financial hardship. Rising healthcare costs, including out-of-pocket expenses like medication and supplemental insurance costs, might also take a large portion of monthly income.
Seniors who wish to leave their children or grandchildren with a tax-free gift might also choose a term policy. The death benefit paid to the beneficiary can be used in any way the he or she wishes: A down payment on a house, college or vocational school tuition, a wedding or starting a business. The death benefit can also be used to purchase an annuity to provide lifelong income and financial security. For some, this is the greatest gift that can be given.
Why Senior Citizens Should Consider Term Life Insurance
Senior citizens might need to purchase life insurance for any number of reasons. They might need it to supplement other term or permanent policies in order to cover outstanding debt and other financial obligations. While a permanent whole life policy has a cash-building account against which a senior citizen can take a loan, a permanent life insurance policy is more expensive and the gains in the investments can trigger a tax liability. Further, loans that are taken against the policy will reduce the amount of the death benefit paid to the beneficiary if they are not paid back before the policyholder dies.
Seniors who are close to age 65 typically consider a term policy with at least a 10-year term but not more than 20. Very few insurance companies will issue a term policy to a person beyond the age of 85. Term policies with a level premium allow a senior citizen to pay a fixed premium amount every month without the fear of the incurring additional costs at a further point in time.
Why Senior Citizens Should Review Their Insurance Premiums Carefully
Life insurance premiums are based on the age, health and lifestyle choices of the applicant, along with the length of the term and the amount of the death benefit. Even a senior citizen in very good health will pay more for insurance coverage than a person who is younger. But for a senior citizen in very good or even excellent health, the premiums may very well be affordable.
Once type of life insurance for senior citizens is called “guaranteed acceptance”. This kind of policy provides coverage regardless of existing health issues like heart disease, cancer or diabetes. Premiums for guaranteed acceptance policies are more expensive than those of standard term policies, but almost all who apply for them are sold a policy.
Senior citizens should also be aware that since states regulate the policies insurance companies are allowed to sell, the specifics of the policies and the rates may vary from state to state. In other words, some life insurance products offered by some companies in some states won’t be available in all states. Premiums for men are typically higher than premiums for women, except in the state of Montana. Senior citizens should also be aware that if death should occur within the first two years after the policy is issued, most insurance companies will investigate to ensure that a fraudulent claim has not been made.
Companies that Sell Life Insurance Policies Specifically for Seniors
Senior citizens can purchase life insurance at almost any life insurance company or through any life insurance broker. Senior citizens who have Internet access can begin the process of finding the best policy online. Almost all insurance companies now provide comparative quotes and policy information online. Seniors can also find unbiased reviews of insurance companies, current credit ratings and news. Metropolitan Life, New York Life, Prudential and John Hancock all offer tips and advice in selecting the right policy. Each company also has a “contact us” link so that seniors can easily get additional information about products that best suit their specific needs. Senior citizens, more than any other group, should always consult with a qualified advisor or trusted family member prior to making an insurance purchase online.
Senior citizens will also find a variety of life insurance policies at sites like AARP and AAA. And, if a senior citizen is part of an organization like a union, alumni association or other large group that offers its member benefits, he or she might be able to find a group life insurance policy that is both affordable and geared specifically toward senior citizens.
Senior citizens can also find additional help regarding their life insurance needs from a licensed independent insurance broker. The independent broker can provide guidance with other investment categories like annuities. A senior citizen with a Certified Financial Planner should consult him or her to determine how a life insurance policy fits into the overall investment portfolio. As we are all living and working longer than ever before, it’s essential that the life insurance policies we choose are appropriate for the changing needs of our lifestyles and families.
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