If you have shrewdly invested and saved money all of your life, you may not need to buy life insurance after 65. You may need to reassess if you need to continue coverage if you have any coverage as well. Review your current monthly expenses and calculate your future financial expenses. How much life insurance coverage, and premium payments, are essential for your needs?
Life insurance coverage offers many benefits. It can be leveraged against a loan. A policy can accrue value over time or if it is pegged to the dictates of financial markets. Life insurance pays out death benefits to beneficiaries. However, if premiums are just too high relative to the benefits, if your mortgage is paid in full and you have no debts, or if your children are self-sufficient and don’t have to depend on you for care, a policy may not make sense for you. Realistically, this is not the case for the vast majority of senior citizens.
Still, most senior citizens live on fixed incomes and deal with monthly expenses. If you think you need life insurance, or want to assess the coverage you have, it’s important to have the right amount of coverage you need. Otherwise, you will just be wasting money at a time of life when you can’t afford to. There are essentially three main types of life insurance for seniors.
Burial insurance may be just enough life insurance coverage for your needs. It is a bare-bones life insurance policy that is essentially used to pay for funeral expenses. You can borrow against its value, but that goes against the point. The average burial insurance policy is only worth about $25,000 and should only be used for all final expenses.
You can apply for coverage over the phone. Best of all, you don’t have to go for a medical exam. You can name a beneficiary who will be charged with using the policy to pay for your final expenses.
Whole Life Insurance
Whole life insurance is a form of life insurance that stays in force for the rest of your life. The rate of premium usually does not increase and stays the same every year. You can designate beneficiaries to receive death benefits. Also, you can borrow against the cash value of the loan. Still, whole life insurance policies can be very expensive and legally complicated. They might be your best option if you want to mitigate estate tax responsibilities to your family after death.
Term Life Insurance
The average person lives for about 70 years, give or take. So, even with the benefit of medical care in the digital age, a 65-year-old person can expect to live a few years or a decade or two. Do you want to be paying for life insurance premiums into your 80s or 90s? What would you or your family get out of it?
One life insurance product that may help you with those questions is term life insurance. It is much cheaper than whole life insurance with most of the benefits. You can name beneficiaries, borrow against the policy’s cash value, and the premium rate stays the same. The difference is that term life insurance policies only offer coverage for a predetermined number of years.
You can buy term life insurance coverage for a finite period of time, like 5 years, 10 years, or 30 years. If you have a 10-year term life policy worth $150,000 and die after nine years, then death benefits will be paid. The problem is if you live for ten years and one day, then the policy is no longer enforceable, and you must start over. This form of coverage is affordable and yet a gamble.
Buy Coverage for Your Exact Needs
The average life insurance policy is worth about $250,000. Life insurance is much more expensive if you purchase it in your 20’s and 30’s. If you are over the age of 65, depending on your finances, you may not need it, or it may just be too much for your current needs. Assess your finances and only pay for the kind of coverage you need.