Imagine living until the average life expectancy of 78.7 years with no financial backing. What would your loved ones do? How would they take care of your final arrangements? Are you leaving behind debts and other unmet financial needs?
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Life insurance is a real need for everyone, not just the young and healthy. According to the Survey of Consumer Finances, 60 percent of senior households (65 years and older) have debt and the median amount of debt is $31,300.
In addition, the Journal of General Internal Medicine reported that 1 in 4 seniors approach bankruptcy due to average medical expenses of $38,000 in the last five years preceding death. Why take a chance?
Now that you realize the importance of life insurance for seniors, it’s time to learn how to save on your policies.
How to Save on Life Insurance for Seniors?
Now that you know you need life insurance, what’s the best way to save? The two most important factors are your timing and lifestyle.
Remember when you were in your 20s and 30s and were constantly pushed to consider life insurance? It’s for a good reason. On average, premiums increase 8% – 10% per year.
Let’s take a basic policy premium of $800 that you could get when you were 20-years old. Now let’s say you waited until you were 40-years old to take out the policy. You could be looking at double the annual premium just because you waited.
If you think you need life insurance now and you’re over 60-years old, act fast. The quicker you buy your policy, the lower premiums you may obtain.
Live a Healthy Lifestyle
According to the CDC, 21.7 percent of older adults are in fair or poor health. Fair or poor health causes life insurance premiums to skyrocket as it increases the risk of the insurance company’s liability. Most insurance companies require medical exams, which include blood samples and urine tests, so there’s no getting around the issues. However, if you lead a healthy lifestyle, it can help in more ways than one.
A few examples include:
- Eat a healthy diet, which provides plenty of fiber as it helps reduce the risk of heart disease, diabetes, and colon cancer. It helps lower your blood pressure, all of which insurance companies evaluate when determining your premiums.
- Drink at least eight glasses of water a day. Water flushes the toxins out of your body, which helps your body operate optimally.
- Exercise at least 30 minutes a day. You don’t have to do strenuous exercises, just activity that gets your heart rate going, such as a brisk walk. You don’t have to do all 30 minutes at once. Break it up into 10-minute increments if you have to; just make sure you get enough time in each day.
- Don’t drink or smoke. Drinkers and smokers pay as much as 100 percent to 300 percent more than non-smokers and those that don’t drink.
Consider Second-to-Die Life Insurance
If you’re in a high-risk category and find life insurance rates to be too much, consider second to die life insurance.
As the name suggests, second-to-die life insurance only pays out when the second person dies. This usually pertains to married couples. Life insurance doesn’t payout to the beneficiaries until both parties die. This is a common policy for parents that want to cover the estate taxes, or estate settlement costs their children will incur upon passing of both parents, for parents of a special needs child, or those that want to leave behind a legacy to a charity or other organization.
You may save a significant amount on the premiums when you only have one policy rather than two. If both you and your spouse have individual policies, you pay two premiums. With second-to-die insurance, you pay one premium, and it’s based on the likelihood of BOTH parties dying, not just one.
Don’t Overbuy Insurance
While millions of people realize they don’t have enough insurance, many end up overbuying, especially seniors. As you age, your need for life insurance may decrease (but not dissipate).
Think about your debts and current needs. What are you leaving behind? Who needs to cover the expenses? Who will cover the cost of your final arrangements? If you’re over 60-years old, the chances are that your kids are out of the house or close to it, so keep that in consideration.
Ask yourself the following:
- How much debt do you have?
- How much debt do you see yourself having in the coming years?
- Do you have money set aside to cover your final arrangements?
- Do you want to leave money for your children?
Most importantly, you must shop around. Don’t jump at the first policy an insurance company offers you. Know your options, including the amount of the premiums and the type of coverage. Read the fine print and know what you’re paying for and how it will affect and/or help your loved ones upon your passing.
As you shop around, consider riders you may want to include, such as an accidental death rider or long-term care rider. These riders will add to the premium, but if you need/want the coverage, it may be worth it.
Seniors have just as high of a need for life insurance as the younger generations. With life expectancies increasing thanks to lower rates of cancer and overdose deaths, it’s becoming more important for even those over the age of 60 to carry the proper insurance.
Know your needs and find the agency that offers it at the most affordable rate. Make sure you know the financial strength of a company and read its reviews to understand how it operates. Paying for life insurance now will help your loved ones upon your passing, allowing them to properly grieve without the pressure of financial issues.