As you get older, and more wiser you start to look back when you were younger and wish you had done things a little bit differently. This is especially true when it comes to Life Insurance. When we are young and healthy we don’t feel we need life insurance so we wait to buy or you may have not been financially stable enough to purchase anything but term life insurance that has since expired. Whatever the reason may be, you are never to old to purchase life insurance. Life insurance is a great way to ensure your legacy carries on and that your hard work is preserved for years to come.
As of 2017 there were 47.8 million Americans over the age of 65
Why should seniors have life insurance?
When you pass away, especially unexpectedly, your loved ones could be responsible for some major expenses. Life insurance can help with the financial burden caused by your death. Here are some factors/expenses to consider.
- Funeral Costs
- Medical Bills
- Credit Card Debt
- Personal or Business Loans
- Pension or Social Security Replacement
The average funeral costs are hovering around $10,000, it’s important to have a plan in place to pay for burial expenses. If you don’t this could be a burden to loved ones.
The majority of us, when dying, tend to rack up some hefty medical bills. Guess who is responsible for paying those medical bills after you are gone? Yes, your loved ones! Life insurance can solve this dilemma if planned correctly.
Believe it or not, a lot of seniors still have a mortgage on their home. Whether they refinanced to save money or have a home equity loan, this has to be paid once the borrower dies. With life insurance, a lump sum death benefit is paid out which could be used to pay off a mortgage.
Credit Card Debt
We find this dilemma in many homes of seniors that we visit. It’s very easy to pile up credit card debt, young or old. It’s important to have a game plan on how these debts will be paid off when you die. If not your loved ones will be on the hook for your expenditures.
Personal or Business Loans
If you still own a business especially with a partner, it’s very important to have life insurance in place to ensure your loved ones are protected. Buy-Sell agreements work best in these types of situation, and are legal binding documents.
Pension or Social Security Replacement
Pensions and social security are vital to many seniors retirement income. Social security income amounts to almost $3,000/month for households with two retirees, while a pension could be significantly more.
Unfortunately with many pensions if the right option is not chosen at retirement, your spouse could be left with nothing when you die.
With social security income we know that when a spouse dies, the remaining spouse keeps the highest benefit. This means that you will lose the lowest paid benefit, which causes a financial burden if the right planning hasn’t been done.
Best Life Insurance for Seniors
Now that we have gone over why seniors need life insurance, lets look at what types best fit:
Term Life Insurance
Term life is always a great choice and will be the most affordable coverage, but comes with limitations for seniors. First off you will have to pass a paramed exam to qualify for coverage.
Also you will be limited in how many years you can have the coverage for. Most policies will only allow for a 10 and 15 year term.
Term life insurance is a very good way to make sure mortgages, credit cards, and medical expenses are paid off when you die.
Companies with favorable term life for seniors:
- North American Life and Health
- American General Life
- Protective Life
- Assurity Life
- Foresters Life
Simplified Issue Whole Life/Final Expense
If all you are looking for is small policy to cover funeral expenses then a whole life policy is your best option.
Face amounts range from $5,000-$25,000 and the premiums are guaranteed for life.
Underwriting on these types of policies is very liberal and will cover many pre-existing medical conditions provided they are under control.
Whole life policies do build up cash value that can be borrowed from if a need should arise.
Companies with the best rates are:
Guaranteed Issue Whole Life/Graded Benefit Whole Life
A graded benefit whole life policy fits seniors with serious health problems. This coverage can be confusing if not explained properly for this reason:
All the death benefits are graded, which means if you die from something other than accident the first two years, then this is how a payout would look.
- If you die in the first year, your beneficiaries will receive premium plus interest
- If death occurs in the second year, the payout would be usually 50% of the death benefit (varies by company)
- After second year full death benefit is paid for sickness and accident.
A guaranteed issue whole life is for seniors whose health is so bad they cannot qualify for any life insurance, even graded benefit whole life. These policies ask no health questions. The major downside is:
- The first two years, a guaranteed whole life policy only pays the death benefit if the death is an accident. They do pay premiums plus interest to your beneficiaries, but no death benefit is death is not from an accident the first two years.
- After two years they will pay on any death
Guaranteed Universal Life (GUL)
With a universal life policy there comes a lot of variation with how they function. We are only going to concentrate on guaranteed universal life insurance (GUL) because we feel this is the best option for seniors. It’s the easiest to comprehend which is crucial to ensure all clients have a good understanding of what they are purchasing.
Here are some of the features:
- Guaranteed Premium
- Guaranteed Death Benefit
- Some Cash Value Accumulation
- Great for Face Amounts of $25K and Above
- Must Have Good to Fair Health Status to Qualify
- Cheaper than Whole Life
- Protection till Age 120
It’s always a good idea for any senior looking to purchase life insurance to make sure all premiums are guaranteed for the life of the policy.
Best companies for GUL
If you thought getting life insurance was out of the question because of your age, you couldn’t be more wrong. The key is making sure to shop around and find the best company that fits your objectives. It always advised to consult with an experienced agent to help guide you through the process. If we can help or you have any questions, please give us a call.