Senior Living News

Advertisements for life insurance policies designed specifically for seniors run on television frequently. These ads tout benefits like low premiums and guaranteed coverage for older adults and may leave you wondering whether you should buy a policy. To help you make an informed decision, LifeStream at North Phoenix senior living community is pleased to present this guide.

What Is Life Insurance for Seniors?

Before getting into the benefits and drawbacks of buying life insurance, it’s important to understand what life insurance policies geared toward seniors are. These policies are usually only available for people over a certain age, such as 55 or 65, and have guaranteed acceptance, meaning you won’t be turned down if you have a chronic health condition like COPD or diabetes.

The type of life insurance advertised for seniors is usually a term policy. With this type of insurance, you get coverage for a set number of years known as the term. At the end of the term, the policy expires.

When you pass away, term life insurance pays a sum called a death benefit to a person or entity you specify. In exchange for this, you pay a fee called a premium. With most life insurance, you pay the premium on a monthly basis to keep the policy active.

Benefits of Life Insurance for Seniors

There are some benefits to buying life insurance as an older adult.

• Less stress for your loved ones: Many seniors purchase life insurance to ensure their loved ones have the funds necessary to handle their final expenses, such as a burial or cremation.
• Wealth creation: A life insurance policy can make it possible to give an inheritance to your loved ones, even if you haven’t been able to save money over the years.
• Paying off debts: If you have outstanding debts like credit card bills or a mortgage, proceeds from life insurance can cover these debts so they’re not deducted from your estate.
• Support for dependents: Seniors who financially support their children or grandchildren may wish to purchase life insurance to help their loved ones manage expenses in the future.
• Tax benefits: Depending on their tax situation, your loved one may not have to pay taxes on money they receive from a life insurance payout.

Drawbacks of Life Insurance for Seniors

For all its benefits, life insurance does have a few drawbacks for seniors that you need to be aware of before you buy.

• Steep premiums: Life insurance companies establish premiums based on the risk of insuring a person. Due to their age, older adults are considered a higher risk and are typically assessed higher premiums as a result. If you have any health conditions, the price may be even more expensive.
• Limited death benefits: Guaranteed life insurance policies often have limited death benefits, so you may not be able to get as much coverage as you need.
• Waiting periods: Some life insurance will only pay the full death benefit after you have a policy for a set number of months or years. If you pass away before that, your loved ones may only get a refund of the premiums you paid before your death or a portion of the death benefit.
• Risk of being misled: Unfortunately, life insurance agents may not accurately describe the details of a policy, or there may be fine print you’re not made aware of. While you can protect yourself by carefully reading policy details, contracts are complex and can be confusing.

Alternatives to Life Insurance for Seniors

As you consider how to provide for your loved ones, keep in mind that alternatives to life insurance are available.

• Burial insurance: Intended specifically for covering final expenses, this type of insurance typically has a limited face value and low monthly premiums. Most companies don’t require a medical exam for coverage.
• Self-funding: Opening a savings account at a local bank in Phoenix, AZ, or through an online bank can allow you to set aside money for your loved ones. The money you deposit will earn interest, and you can usually add a beneficiary to your account so they receive the funds when you pass away.
• Funeral preplanning: If final expenses are your biggest concern, you can look into paying for your funeral in advance. This lets you ensure costs are covered and plan the details ahead of time so your loved ones don’t have to make decisions when they’re grieving.

How to Decide If Life Insurance Is Right for You

To determine whether life insurance is right for you, consider your goals and your financial situation carefully. If you don’t have any debts, your family is financially independent and you have money saved in a bank account, investment account or retirement account, life insurance may not be necessary.

If you do decide to purchase a policy, obtain quotes from multiple insurance companies. Consider the death benefit size, the monthly premium amount and any fees and restrictions of policies, and be sure to read over all the information carefully before you buy.