For seniors, there are several options that you can choose from when it comes to life insurance policies. One of the more interesting is prepaid life insurance, a type of policy that has become quite popular for different reasons.
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How does Prepaid Term Life Insurance Work?
A prepaid policy is one where the payments have been made in advance to expedite the services or coverage of the insurance itself. In most cases, the period of the prepayment is roughly one year, although there are cases in which the insurance was prepaid for a greater period.
This type of insurance that is prepaid for at least one year is considered an asset on the balance sheet of corporations who use such policies.
Purpose & Benefits
For the most part, prepaid or preneed life insurance is meant to pay for funeral costs before they are needed. In most cases, seniors who want to relieve the financial burden of their funeral expenses from their families will take out a preneed or prepaid policy. Most policies are tied to funeral directors who will place the money in trust so that when the need arises the funeral will be fully paid for which brings peace of mind to the family at least from a financial standpoint.
The benefits of having a good prepaid policy start with the financial peace of mind it brings to the family of the policyholder. An additional benefit is that the arrangements for the funeral can be made in advance so that the wishes of the policyholder can be carried out.
With funeral costs soaring on average to over $9,000, it is important to have sufficient funds available to perform the funeral the way it is intended.
How Does Preneed Life Insurance Help Seniors?
This type of policy helps seniors in a variety of ways, especially if they are on a fixed budget and want to cover their burial expenses.
- Simple, Direct Policy
- Pays for the Full Cost of the Funeral
- Relieves the Financial Burden for Families
- Provides Direction for Arrangements
The advantages can be found when purchasing the proper preneed policy. Keep in mind that most policies of this type are refundable if the wishes of the policyholder change.
Related: Get More Information about Burial Insurance for Senior Citizens.
Who Offers a Prepaid Plan?
Most insurance companies that offer burial insurance will have a preneed or prepaid policy.
Furthermore, many funeral homes offer a prepaid funeral plan as part of their services. You should start with your insurance company to see if they carry prepaid policies for their life insurance. The reason why most companies sell such policies is that the money is paid upfront for at least a year which qualifies pretty much anyone who wants this type of protection.
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For seniors, the advantages of prepaid or preneed are noteworthy and need to be considered when thinking about burial costs. If you want to relieve the financial burden of funeral costs from your family, then having this type of life insurance is the best option for your needs.