Life Insurance for Seniors
Another benefit for seniors is that it offers a way of transferring your wealth to your heirs without inheritance tax. This is a great way to leave value to your inheritors. Furthermore, the policy is often exempt from creditors. Laws and policies vary from country to country (also states and provinces) so consult your policy holder for particulars. Term Life Insurance for seniors Term Insurance provides coverage for a limited period of time. At the end of the term, the insured can either terminate the policy, or continue the policy with increasing costs. On a value basis, Term Life Insurance is usually the least expensive way to purchase a death benefit. Term Insurance is the original type and is often referred to as "pure" insurance. That's because it does not build cash or value like other types such as "whole life" or "universal life". Really, think of it like car insurance, or household insurance. For example, if you sell your car and terminate your policy, there is no cash build-up to return to you. It's just cancelled, and that's it. Term insurance is considered "risk" insurance just like your car insurance, "in case of..." coverage. One important issue for elderly people is that Term Insurance is not usually available to those over the age of 85, although their are exceptions and options available. Check with your insurer. One challenge that often arises is the topic of insurability. With a common policy of one year term insurance, if the person dies even 1 day after that year, then there would be no insurance coverage. But let's say the person with a one year policy gets a terminal illness, but did not die until after the one year term. The problem arises with "insurability" as no insurance companies will offer a policy to someone with a terminal illness. The solution? Get an Annual Renewable Term (ART). In this type, the policy offers renewal every year for a set period of time and up to the age of 90 in some cases. Although you could renew up to this age (which could be a period of 25 years or so), the policy gets more expensive year by year (as you age) so eventually the benefits are outweighed by the expense. In other words, you'd be paying more for the insurance policy than it would pay out on your death. A more common type than the annual renewable term policy is the "Guaranteed Level Term Life Insurance". It's similar to the term insurance above, except the premium is guaranteed to be the same for 10, 20, 30 years or so. The insurance companies analyse probabilities of course, so the longer the guarantee, the more expensive the policy. IMPORTANT: If your health declines substantially over the term, the insurability may not be guaranteed. You should review your policy to check this condition. 
Whole Life Insurance for seniors Whole Insurance is a type that remains in effect the "whole life" of the you, the insured, unlike Term Life Insurance. Typically, you have to pay into the policy every year, although some exceptions apply. Both the premium and the death benefit remain unchanged throughout, in most cases. The insurance company invests a portion of your premiums, and so a cash value builds in your policy as time passes. This cash value is also tax-deferred until you withdraw it. And, as an asset, you can borrow against it as well. Most financial advisors will not promote whole life insurance (with it's invested cash value) strictly as an investment because, even with it's tax benefits, the rates are so low that there are almost always better financial investments elsewhere. However, if you do need life insurance, it's nice icing on the cake. Whole life insurance offers lifelong coverage with your premiums remaining constant, and no future medical exams are required. In closing... There are many type of insurance policies, and some offer particular benefits to seniors. Whether you are seeking Long Term Care insurance, or a policy with an investment component, there are many choices to consider. Most people seek the advice of a qualified insurance agent or insurance broker to suggest the best plan for your particular circumstances.
BACK to Estate Planning articles LEAVE Life Insurance article and go to Home Page |
Well, as usual, the answer is, "it depends". For younger individuals who have just been married, had a child, received a mortgage, and other milestones, it's easy to figure out that these items need protection in the event of your death.
The main reason seniors purchase insurance is to remove any financial burden from their loved ones at their time of their death. Primarily, this includes end-of-life medical expenses, and funeral expenses. In both case, the payouts of standard insurance policies are often not adequate amounts to meet these financial demands.