Losing a loved one in a family is a sad scenario, but the situation can be worsened when the people left behind are slapped with the burden of taking care of the individual’s expenses and liabilities. It is essential to buy a life insurance policy for seniors and ensure your loved ones do not have to strain financially once you are gone.
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Table of Content
- How Does It Work?
- Features Of Whole Life Insurance:
- Common Variations Of Permanent Life Insurance:
- Differences Between Term Vs. Whole:
- How Much Is Whole Life Insurance For Seniors?
- Pros And Cons:
- What Is Dividend Paying Whole Life Insurance?
- Top 5 Dividend Paying Whole Life Insurance Companies in the US
- Using Whole Life Insurance Dividends
- Frequently Asked Questions (FAQs)
- How To Get Affordable Life Insurance?
How Does It Work?
Whole life insurance for elderly are policies taken by old people to protect their loved ones from the financial burdens that might arise after they pass on. This policy covers an individual from the time they get the policy until they die. After they pass on, the beneficiaries listed on the policy receive the amount of money that had accumulated.
This policy helps cater for medical bills, funeral costs, mortgage payments and special needs dependents.
Permanent life insurance is available for adults of any age, but the terms are a bit different when it comes to seniors. This special treatment of seniors is due to the volatile health conditions common with old people. Most firms have different cut off ages and limitations to the insurance policies seniors can take, and it is essential to find a suitable one.
Features Of Whole Life Insurance:
- The benefits are passed on to the beneficiaries without being taxed.
- Can be used as security for securing loans and mortgages.
- Builds cash value over time.
- The coverage lasts a lifetime.
- Can be used as an investment vehicle.
Seniors must attain some set qualifications before they can be awarded this insurance coverage. The first one is the age, and several limits are placed for people over 70 years old. Most companies have different cut off ages beyond which individuals cannot get senior life insurance.
An individual’s health condition is a vital checking point when trying to get this policy. Seniors are often subjected to health checkups, and they have to meet the set standards before they can be awarded insurance.
Common Variations Of Permanent Life Insurance:
- The guaranteed whole life policy is an ideal option for seniors, and it is widely regarded as a hybrid between permanent life and term insurance. This policy is less expensive than the whole life, allows one to select the length of the policy, does not accumulate cash value and has level premiums.
- The variable life insurance policy is a version of permanent life insurance with an investment aspect in it. It has a cash value which is invested in several other accounts listed in the policy.
- The graded premium life coverage is a policy which has a provision for annual increases in premiums for a specific period. This is meant to allow the initial payments to be affordable to the insured person. The graded benefit whole life insurance is designed for people who are not in right health conditions. This policy allows such people, who would normally not be allowed to get an insurance coverage, to buy a permanent coverage.
Differences Between Term Vs. Whole:
Whole life insurances build up its cash value over time while term insurance does not. Term insurance is meant to cover an individual for a specific period while the whole life covers one until they pass on. Term insurance is the most straightforward and affordable life coverage to buy.
Full life policy can be used as an investment vehicle while term insurance cannot be used for such purposes. Term insurance normally lasts up to a maximum of thirty years depending on one’s age and the available terms. The premiums paid in the case of term insurance are higher for people aged above 50.
There is a fine line between term and permanent life insurance with each of them having its advantages and downsides. However, the whole life coverage is better since it covers one until they die and keeps the beneficiaries safe from any financial shocks once their breadwinner passes on.
How Much Is Whole Life Insurance For Seniors?
The average cost of life insurance for a 50-year-old senior is around $77 per month and $122 for a 55-year-old. A senior aged around 60 years will be required to pay $208 per month and a 65-year-old around $350 monthly.
Note: The price mentioned here are average number. To get free whole life insurance quotes, click here.
Pros And Cons:
- Covers one until they die.
- Accumulates cash value.
- Can act as an investment vehicle.
- Can be used as security for loans.
- Can be a good source of tax-free income for your beneficiaries.
- Expensive premiums.
- Complicated and difficult to buy.
- Rigid checks for seniors before they can be allowed to buy the policy.
- Returns are less compared to usual investments.
What Is Dividend Paying Whole Life Insurance?
Whole Life Insurance involves a permanent life insurance set across your entire life (whole). With “dividends,” the life insurance policy has a declared rate for paying dividends. In general, anyone with a policy will have a role in the company’s profits.
It’s similar to purchasing a stock except there are added benefits of having life insurance on top of what’s already there.
This provides additional value to policyholders who are looking to maximize their life insurance policy. It’s important to note these policies come with a pre-set cash value increase and it’s guaranteed.
In general, these increases are established after a risk assessment by the company and is often built around a worst-case scenario. This is dependent upon the life insurance company and what its analysts come up with.
For those who are wondering how it works, the dividend paying whole life insurance involves the company assessing its earnings, death claims paid, and general expenses before coming up with a projection. This is a projection used to come up with your dividend.
The remaining benefits come with the policy itself like any other whole life insurance package.
- Can Borrow Against Cash Value of Policy
- Guaranteed Death Benefit
- Premium Doesn’t Rise Over Time
- Incoming Income For Years From Dividends
- High Premiums (Dependent on Company)
- Takes Time To Understand Fully
Top 5 Dividend Paying Whole Life Insurance Companies in the US
Ameritas is among the leading whole life insurance companies in America.
It provides a “Limited Pay Life Insurance” plan with a funded policy (10 Years). This ensures clients receive full flexibility with their plan and don’t see their premiums rise at any point. Their policies are renowned for offering tremendous cash value growth.
2) American United Life
American United Life offers great customization with its whole life insurance policies and includes a “paid up” rider option. This ensures the premiums are kept low, and a person can continue to see cash value growth over time. With their policy, policyholders can double their dividends and continue with the same permanent life insurance features.
Foresters offers a significant interest rate of 6% on its dividends. This has been the case for over a decade, and it’s even reached nearly 7% in the past.
This is among the best in the business and includes a “no medical” life insurance setup. This ensures a person can gain acceptance in no time while still retaining full benefits along the way.
Foresters average dividend interest rate has remained above 6% for the past 13 years, coming in at a good 6.83% for 2016.
Guardian has a unique banking strategy as it looks to remain a direct recognition company. They illustrate excellent cash value growth and have a ten pay limited pay life insurance policy. They have a set dividend interest rate that hovers in the 5-6% region on a yearly basis.
5) Lafayette Life
Lafayette Life is the final addition to this list and is a non-direct recognition company. It is well-regarded for performing well and has a set dividend rate of 5.10% as of 2016.
It has also earned an A+ rating from “A.M. Best,” which is a highly reputable source.
Using Whole Life Insurance Dividends
The premise of the dividends is to accrue cash value as you get older.
It’s a return on your investment, and the money can be used to pay off premiums or use as you wish. A person is free to use the funds as they desire and these can be directed in any direction. It’s highly recommended to keep the life insurance policy self-sufficient by using these incoming dividends.
If not, a person is also able to invest those funds and direct them towards other investments.
Frequently Asked Questions (FAQs)
1) How Are Dividends Paid?
The dividends are paid at a set rate and will come in annually. These are going to be paid as required by the policyholder but in most cases are offered in check form.
2) Are Dividends Taxed?
No, these are not subject to taxation.
3) When Should I Sign Up For Dividend Whole Life Insurance?
It’s best to sign up as soon as possible to take advantage of the policy’s conditions. The longer term under “whole” will lead to an increased chance to gain in cash.
4) What Is Cash Value?
Cash value is the amount of value the policy builds up over time. You can leverage this as you would any other asset.
5) Are Payments Permanent On Your Premiums?
Yes, these are going to remain to the end, but a person is eligible to pay them in one shot if desired.
How To Get Affordable Life Insurance?
Several companies offer life insurance for seniors today and scouting around for the best prices is fundamental when trying to find an affordable one. With the standard variations of this policy, ensure you consider the tailored policies as some of them might be offering a better deal for your situation.
Avoid any add-ons that might inflate the cost of your insurance and ensure you act fast when buying a policy since you have no idea when your health will start deteriorating.
You must get multiple quotes online and compare them in order to get the most affordable life coverage.
At the end.
The good and bad of whole life have been seen, and it is vital to analyze your situation before deciding on which kind of life insurance is suitable for you. The whole life insurance for seniors is ideal for people who have several dependents who may suffer once they are gone. It is also useful for those whose funeral costs have not been catered for as well as other debts such as loans and mortgages.