Life Insurance for Seniors
Life insurance for seniors addresses the particular need to take care of loved ones in the event of an untimely death at an older age. Funeral costs, medical bills, and household expenses are all areas that need to be addressed, especially when the loss of one of the couple will mean a loss in income. Given all this, how does someone in their golden years decide how much and what type of life insurance is best?
Types of life insurance
All variations of life insurance policies on the market can be placed into two main types, term and whole life. Term insurance is purchased for a specified period of time, say 10 years, and pays a death benefit to the beneficiary if the insured dies within that period of time. The cost of term life insurance is based on the mortality cost of the insurance, and is calculated based on the age, health, and lifestyle of the insured. There is no cash accumulation with term insurance, and at the end of the period of time, the coverage ceases.
Permanent life insurance has no end time; as long as the insured pays the premium, the policy stays in force. The cost of permanent life insurance is composed of a mortality cost, like term insurance, but will also consist of a cash savings portion which will earn interest and accumulate inside the policy. The premium of the permanent life insurance can be higher than that of the term policy, but the cash values and much longer length of benefit period more than make up for it.
Uses for both types of insurance
When choosing life insurance for seniors, remember that both types of insurance pay a death benefit, but they are best used in differing circumstances. Term insurance is best used when cost is a concern and can be thought of a policy purchased to cover mortgage or some other debt obligation in the event the insured passes away before the debt is paid. Term life insurance works best when a person knows a specific time frame of needed protection.
Permanent insurance is best used as a solution to longer term needs, such as funeral expenses. Because of the savings factor, it can also be used as an accumulation vehicle if looked at long-term. Permanent insurance can also be purchased in such a way that the cash values inside of it can be used pay for some or all the costs of the policy after a period of time.
Which is best?
When trying to decide the best life insurance for seniors, take a look at the reason why you want to purchase it. Do you need it for a known or unknown period of time? If you know you want to take care of a scheduled debt that will be paid for in a fixed period of time, term insurance may be the best choice. If you are more interested in taking care of funeral costs, permanent insurance may work best for you. Speaking with a professional life insurance agent can help make your decision easier.