It’s obvious that in today’s economy, there is no shortage of information regarding the best life insurance for seniors. Most of the articles you’ll likely find will focus on the lowest rates or a specific kind of life insurance. But, what seniors should consider first and foremost is why they need life insurance in the first place.
In this article, we’ll discuss the best life insurance for seniors based on the “need” rather than the company or price.
Putting in bluntly, everyone needs life insurance from cradle to grave. Some, however, understand their need for financial protection better than others. We know this to be true because it’s evidenced by the many different products that are available to us. When we identify the need, we can identify the solution. So going forward, let’s discuss the primary reasons seniors need life insurance and then select the most appropriate product that will meet those needs.
You want to Leave Money for Surviving Loved Ones to pay Final Expenses
Final expense insurance is probably the most popular reason seniors need life insurance. It’s really very simple when you think about it. When you die, it’s going to cost money to bury or cremate your body. For some, a funeral is about the disposal of remains, but for the majority, a funeral is about memorializing and celebrating the life of the relative, friend, or family member that has passed away.
The National Funeral Directors Association has published that the average cost of a funeral and burial is currently costing between $9,000 and $12,000. But this is for a moderately priced funeral and there are many out there who prefer adding all the bells and whistles that a funeral director has to offer. This means that $9,000 to $12,000 price tag just went up about 60% or more.
But wait, there’s more! Final expenses are not only about funeral and burial expenses because many seniors will likely have unpaid medical and nursing home expenses when they die. The question here is; “do you want to leave money to cover your final expenses or do you want to leave a bill for final expenses?” Having a final expense policy in place is certainly evidence of your love for your surviving loved ones. So then, in this case, the best life insurance for seniors is Final Expense Insurance which is typically whole life insurance.
You Still have children at home or you’re Raising your Grandchildren
In an article published by The New Republic, the author cites the Census Bureau stating that about 2.7 million grandparents in America were taking care of their grandchildren. They go on to state that this doesn’t mean there isn’t a parent in the household but for various reasons, the grandparents are footing the bill.
One must now ask the obvious question: If the grandparents were no longer in the picture, who is going to take care of the grandchildren financially? This question alone reveals an additional need for life insurance for seniors. Unless grandparents in this situation arrange in advance to financially protect their grandchildren, they’ll likely have no peace of mind knowing that the children will have much of a life if the grandparents were to die unexpectedly.
In this scenario, final expense insurance will likely be insufficient to meet the need because these policies typically have a maximum death benefit of around $35,000. Fortunately, however, if the grandparents are relatively healthy, they can purchase term insurance with a much higher death benefit.
Let’s compare the pricing for the best life insurance for seniors using this scenario. Here we’ll compare the cost of term life insurance versus final expense life insurance for a 65-year old grandfather in good health:
|Age of Applicant||$50,000 Whole Life Final Expense Insurance||$250,000 20-Year Term Life Insurance|
As you can see in this case, the best life insurance for seniors who want to leave sufficient funds for their grandchildren would be to consider a 20-year term life policy rather than a whole life final expense policy. In this example, the applicant can purchase $250,000 in coverage for 20-years instead of a $50,000 policy that would last a lifetime. It’s important to note that in both cases, the applicant would have to be in good health to get these preferred rates. If not, the rate would be substantially higher for the term insurance.
You want to Leave a Substantial Gift to Your Heirs or a Charity
This is also a pretty common scenario. Many seniors want to leave a legacy upon their passing. Since it’s unlikely you will not know the year of your death, in this case, it will make sense to purchase permanent life insurance that will last a lifetime. Although whole life insurance will certainly serve this purpose, it makes better economic sense to consider a Guaranteed Universal Life policy because the cost of your insurance protection is substantially lower.
In fact, you can design your Guaranteed Universal Life policy to accumulate substantial cash value over time that you can easily access in the event of a financial emergency or any other reason for that matter. It’s your money, so use it as you please.
What if I want to Insure against all Three Scenarios?
Finding the best life insurance for seniors should also mean that the product you select can address all of your insurance needs and a Universal Life insurance policy can be an affordable solution.
With a properly funded Universal Life policy, you can leave your beneficiary enough money to take care of your final expenses when you die, leave money for your dependent grandchildren, or leave a financial legacy for your heirs or a favorite charity.
In this case, your independent agent will design a Universal Life Insurance policy that offers the following benefits at an affordable price:
- A reasonably higher death benefit that will last a lifetime (or until any age you prefer)
- Accumulate cash value that you can access via policy loans or partial surrenders
- Flexible terms when it comes to premium payments and the death benefit. This means when life happens, you can adjust your policy to accommodate your change in needs.
When you are searching for the best life insurance for seniors, consider first why you need it, then secondly, how much you need, and then finally, how much it will cost you. Having a life insurance policy for the sake of having a life insurance policy just doesn’t make sense. Instead, identify your insurance need and go shopping from there. If you have any questions or comments please give us a call.