Life insurance for seniors may seem unusual. Many people wonder, is it necessary?
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The short answer is ‘yes in many cases’. When you’re in your later years, the last thing you want is to leave loved ones with unpaid bills for medical and funeral expenses. Those aren’t the only benefits of life insurance for seniors, though.
If you don’t know the benefits, you may overlook senior life insurance and its necessity, but we’re here to help you understand its true value.
Many people assume it’s either unnecessary or too expensive. When you shop around for the right insurance, though, neither is true.
Life Insurance in 2021:
Life insurance used to be just for seniors who needed to protect their families financially in the event of a premature death.
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In recent years, though, most seniors have stopped buying life insurance. They figure it’s too expensive and they don’t need the coverage.
Studies show, however, that most people overestimate the cost of life insurance by as much as 200%. It’s time to find out the truth about life insurance for seniors in 2021.
In addition, studies have shown that almost a third of Americans believe that they need more life insurance, and many also believe that the unexpected death of the family breadwinner would have dire financial repercussions.
However, despite many people knowing its value, a majority would not consider purchasing a new policy in the foreseeable future. So, the question is not whether most people understand the importance of having it; instead, how can their perceptions about the actual cost of life policies be reconciled with reality?
Why Do You Need Life Insurance for Seniors? – The Benefits
Life insurance protects you from the unexpected, or if you’re in your senior years, for the inevitable. It helps you provide your loved ones with the financial benefits of life insurance, protecting them even when you’re gone.
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Here are some of the added benefits of getting life coverage and situations where it makes sense:
You can cover your existing debt
Leaving your loved ones with your unpaid debt probably isn’t how you plan to leave them. Guaranteed level-premium term insurance is suitable for seniors still working to pay off debts. While you don’t want to overpay for life insurance, you should choose a term that expires just as your debts end and an amount that covers the debt and a little more.
You are still working
If you’re still working, you likely need the income to survive. If you die suddenly, how would your loved ones survive financially? A term life insurance policy can protect your loved ones financially while dealing with the grief of losing you.
Your child is disabled
If you have a disabled child who needs ongoing medical care or assisted living, cash value insurance may be a good option. The extent of coverage will be on a case-by-case basis but is often enough to pay for your child’s expenses. Most parents with a disabled child choose a second-to-die policy as it only pays after the death of both parents.
You can provide a charitable legacy
Life insurance for seniors also comes in handy if you’re planning to leave a legacy for charity. For instance, rather than make yearly donations of $10,000, you can purchase life insurance worth $500,000 and pay for the premiums with the equivalent of your regular donation. If appropriately done, the insurance policy will benefit you and the charitable organization.
You want to plan an estate
The proceeds from your cash value or permanent life policy could be used to provide immediate cash for your children. Your family can use the money to pay for funeral costs as well as state estate/inheritance and federal taxes without having to sell jewelry, stocks, or properties.
If you have an ILIT (irrevocable life insurance trust), you can transfer the policy to the trust. This protects the trust proceeds from creditors and estate taxation. An ILIT also removes the value of insurance for senior citizens off your estate. This can be useful if your heirs are still minors or require financial protection.
Making an investment
A cash-value plan can also be a profitable investment. Most banks offer less than a 1 percent interest rate (taxable), while the majority of cash value policies today offer up to 5% tax-free. If you have sufficient funds and have saved for life’s emergencies, you can purchase variable life, universal life, or modified whole life insurance policies. These policies offer cash value that grows tax-deferred.
Each insurance company offers different coverage options, typically ranging from $10,000 to $500,000 and up. The type of coverage varies by the insurance company, with term life policies usually costing the least amount. This senior life insurance does not come with any savings and pays your heir only if you die before term expiration. Term insurance can be purchased with a rising or fixed premium.
Another option is permanent life or cash value. Like the previously mentioned policies, this insurance will pay your heirs should you die, but it is more costly because of its increasing value.
You can choose from variable life, universal life, and graded whole life. Before choosing a policy, look at your financial needs and plans for your loved ones. Most seniors choose a guaranteed no waiting level-premium term life policy for its sufficient death benefits.
How Much to Purchase?
Your next decision is how much life insurance coverage to purchase. Many seniors only need enough insurance to cover burial expenses. However, if you are the breadwinner of the family or you want to leave a legacy, then more coverage may be needed
Consider each factor when purchasing life insurance for seniors. Review all your options, including the costs, to determine which option is best. Don’t wait until it’s too late or until the cost is unaffordable because of your age and/or health condition.
Factors That Affect Senior Life Insurance Premium
Many factors affect your insurance premiums, but understanding them ahead of time can help you minimize your costs.
Applying for senior term life insurance requires you to answer health-related questions, covering a wide range of topics, including cholesterol, blood pressure, height, weight, and other metrics. Depending on the insurance company, an ECG or EKG may be required.
Besides age, other factors affect your premiums, including:
- Family medical history
- Lifestyle habits (smoking will increase your premium)
- Gender (older women generally pay a lower premium because statistics show they live longer)
Other Factors to Consider
Age and health are the primary driving factors in your premium costs, but other factors include:
- Driving Record
- Credit History
- Lifestyle Choices & More
- Provides monetary benefits for your heirs when you die
- Offers superior tax treatment compared to other investments and financial instruments
- Your beneficiary usually doesn’t have to pay any taxes on the death benefits
- Cash value growth is tax-deferred
- Cash value withdrawals are usually handled in a first-in-first-out (FIFO) manner, so the withdrawals up to the premiums are generally tax-free
- Life insurance for older people is more flexible today
- Policyholders have to forego some of their expenses to pay for the premium
- Choosing a policy can be a complex decision
- A good deal of research is required to find the right policy (we can help you to make it hassle-free for you)
How to Find Affordable Life Insurance?
The most effective way to get a cost-effective life policy is to do research and compare the packages. As we’ve demonstrated, there are many policy options available to choose from, and several factors affect the cost of the premium. The first thing you should do is consider your present situation and look for an insurance policy that meets your requirements.
When you’re looking for insurance, review the policy, ensure the terms fit your needs, and you understand them. Keep in mind the coverage varies according to the company and how they assessed your profile. If you have any questions about their policy, ask a company representative to explain.
Remember, you don’t have to apply at the first life insurance company you find. Insurance companies offer different plans and packages to suit different profiles and requirements. Shop around and compare your options.
Get Life Insurance Quotes:
The quickest and most effective way to find senior citizen life insurance is to get quotes online. There are many options today, but which one really fits your needs? Calling each one is time-consuming, but the process will be much quicker and convenient if you get quotes online since everything is just a click away.
Why Choose Us?
We’ve made shopping for insurance simple and convenient. Just submit your zip code or choose the state you are from, and you will get a list of the best and most affordable offers. We update our database regularly and ensure you get offers only from the most reliable and reputable companies in the country.
All the insurance quotes we offer are free and instant, plus most offer discounts. With our comprehensive database, you’ll have an easier time comparing them and determining which is correct. We also include detailed guides about life insurance plans.
It’s difficult to emphasize just how important life insurance for seniors is, and finding the most appropriate plan is necessary.
With our free life insurance quotes, getting the best coverage possible is easy.