Many people choose to buy life insurance when they are younger. People might purchase life insurance when they have children, get married, and assume other responsibilities. Like younger people, older people also have responsibilities to their spouses, children, and grandchildren. They also might have concerns about estate planning and leaving their families enough money to be comfortable when they pass away.
Older adults are able to purchase life insurance. There are some companies that offer term life policies to people who are 70 or older, and some offer whole life policies to people up to age 85. If you are thinking about purchasing life insurance, it is important that you understand where to look and how to evaluate your options. The team at Elder Care Direction can help you to understand the different life insurance policies that might be available so that you can evaluate them better.
Why some seniors think about purchasing life insurance
The first step in determining whether to purchase life insurance is to consider how you and your family might benefit from the coverage. When you have an idea of the benefits of life insurance, choosing the best type of policy for your situation will be easier.
1. Dependents who rely on your income
While people of all ages must consider how their loved ones might be provided for if they pass away, you might have greater concerns if you have a dependent who is disabled and who relies on you for his or her care and income. You might also have more concerns if your spouse is no longer working and would suffer financially if you were to pass away. You might also have concerns if you waited until you were older to have children if they have not yet finished their education.
If you have a substantial amount of debt, it could reduce or eliminate how much money your family might inherit from your estate. Family members who would be unable to handle the debt in your absence might lose assets. Life insurance coverage might help family members who will face debt after you pass away.
3. Farm or business ownership
Once you pass away, your loved ones might engage in conflict or face inheritance taxes that could force them to sell a business or farm. For example, if your assets are primarily those that are needed to operate your business or farm or if you wish to leave your business to one of your children but do not want to disinherit the others, you can use life insurance to solve some of these potential issues.
4. Worries about final expenses
Burial and funeral expenses can equal thousands of dollars. Your loved ones might feel that they are caught between wanting to honor you properly and the financial burdens that a funeral can impose. If your family is not wealthy, having a burial policy can help them to plan a funeral and burial without additional stress.
5. Heirs with an immediate cash need
When you die, your estate may go into probate. The probate process can be time-consuming and expensive. Typically, beneficiaries are able to collect a death benefit from life insurance soon after they provide the insurance company with a certified copy of the death certificate. If your estate is complex or has the potential for legal challenges, your spouse and children can avoid potentially serious financial issues if you have a life insurance policy for their benefit.
6. Charitable causes
Some older adults are dedicated to charitable causes and want to donate money. It is possible for you to purchase a life insurance policy in which your favorite charity is named as the beneficiary.
7. Ability to transfer tax-free wealth
A life insurance death benefit is not considered to be taxable income. You are able to use a life insurance policy to leave your designated beneficiaries money.
8. Other benefits
In addition to the value of the death benefit that your beneficiaries could receive, there are also other benefits that some types of life insurance policies offer. These might include cash value policies or being able to sell the policies in a senior life settlement.
Types of senior life insurance policies
There are several types of life insurance policies that are available to seniors, including the following:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Final expense insurance
People who are in relatively good health and who are 65 or older should be able to find companies that offer 10-year or 20-year term life insurance. Term insurance has lower rates, meaning that it might be possible to find a policy that has more coverage than you might be able to afford with permanent life insurance.
Whole or permanent life insurance offers you coverage for the rest of your life as long as you continue to make your payments. These policies are more expensive than term life insurance, but your policy will not expire when you get older. Permanent life insurance also lets you grow a cash value that provides you with tax-advantaged returns.
Universal life insurance is a more flexible type of permanent life insurance because you are allowed to vary your premium payments from month to month within established limits. Excess money that you pay is deposited into a cash account that can earn returns. Some policies allow you to use your cash account to make the premium payments when you grow older.
Burial or final expense insurance is a type of whole life insurance that offers modest death benefits. In most cases, the amount ranges from $5,000 to $25,000, and the policies are meant to give your beneficiaries money to pay for your final expenses. Your loved ones can spend the money however they choose, meaning that they don’t have to spend all of it on your funeral and burial costs.
Call Elder Care Direction
Deciding whether you need life insurance as an older adult can be a difficult decision. If you would like to learn more about life insurance or other issues that are related to your retirement years, the professionals at Elder Care Direction might provide you with some guidance. Call us today to schedule a consultation.