Tuesday, October 25, 2016
Why Seniors Should Still Consider Taking Out Life Insurance
We’re all used to the idea that we can be struck down at any time by the proverbial bus. That’s why so many people in their 20s, 30s and 40s take out life insurance. They want to protect the livelihoods of their loved ones, should the worst happen. Insurance companies pay out for children to continue to have a great education, or for the family to keep the family home. But what about when people get past retirement age? Then what? Is life insurance still worth it?
Here we’re going to look at the reasons why seniors should get life insurance coverage. Take a look these potential benefits.
Life Insurance Allows Seniors To Leave A Legacy
It’s a sad fact of life that it ultimately has to end. But life insurance allows seniors to create legacies that survive beyond their physical bodies. It provides a way for older people to be remembered by their families when they’re gone. Life insurance can be paid out to supplement a spouse's’ income. It can be used to pay tax-free financial gifts to grandchildren. Or it can be put towards major life events, such as weddings. The possibilities for leaving a legacy are potentially endless.
Life Insurance Pays For Burial Expenses
According to lifeinsuranceforseniorsover80.com, burial expenses are high. Statistics reveal that the average funeral cost in the US stands at around $7,300. Some funerals can cost as much as $10,000, depending on the service and the type of plot.
For many families, this is a high financial cost that they will find hard to afford. Many seniors, therefore, take out life insurance to cover any potential burial costs. Small life insurance packages will cover anywhere from $5,000 to $50,000 worth of expenses.
Some insurance providers will ask seniors questions about their health. But the majority won’t require medical exams in order to take out a plan.
It’s Good For People Who Are Still In Debt
Many seniors are living under a mountain of debt. They either took out big loans in the past that they couldn’t repay, or they lost money in failed business ventures. The last thing that they want is to pass on this debt to their families. So experts recommend that they take out a life insurance policy to cover the risk. Insurance brokers offer a product called a guaranteed level-premium term life policy. You can take out a policy like this that ends just as you’re due to pay off the debt. This means you can both minimize your premiums and cover the risk. Thus, life insurance makes a lot of sense for seniors who don’t want to burden their families with debt when they’re gone.
If you’re currently dealing with debt, usa.gov provides information on how to manage it more effectively.
Life Insurance Is A Good Idea If You Have A Disabled Child
If you have a disabled child, it’s unlikely that they’ll be able to provide a good income for themselves when you’re gone. They will need a lot of care, money for their own activities, and finance for medical bills. James Hunt is an actuary from the Consumer Federation of America. He suggests that seniors in this situation take out cash-value insurance. This insurance should provide all the finance that a child will need to cover their living and medical needs.
To keep premiums down, Hunt recommends families choose what is known as a survivorship-whole life policy. These policies are also sometimes called second-die policies. They only pay out when both parents of the child die - meaning that premium costs are kept to a minimum.
Life Insurance As An Investment
There is a case today for using life insurance policies as an investment strategy. Right now, banks are offering interest rates of around one percent on savings. But for many life insurance policies, the premium is much higher than this. Some policies accumulate 5 percent interest per year.
For seniors who are risk averse and don’t want to play the stock market, a tax-free rate of return of five percent is alluring. Of course, to get that return, you’ll have to hold the policy until your death, in which case you personally won’t ever see any of the money. But if you’re a risk-averse person, it might just be the right plan for you. Don’t forget, there’s also the tax advantage. So if you’re sitting on a big pile of liquidity, getting rid of it though a life insurance plan could be a good idea.