Senior Life Insurance

You are most likely already aware that the younger you are, the less you will have to pay for life insurance. However, this does not stop you requiring some form of coverage in your latter years. Senior Life Insurance is a policy that can usually be taken out by a person aged 50-85. You may believe that by the time you retire, your children will have flown the nest, you will have paid off your mortgage and you will no longer have any debts or financial commitments. Therefore is the any point in having a Senior Life Insurance policy?

The main reason that you would have life insurance, at any age, is to protect your loved ones from financial difficulty or hardship. However, just because your kids are now self-sufficient and even if you have no debts, there is still your funeral and burial expenses to consider. It is estimated that the average burial costs in the United States are approximately $6,500 and the state will only provide a total of $225. You must also take into consideration that for some families, "final expenses" can be as high as $15,000. No matter how financially secure your spouse, or your family are would you really want to leave them a bill of this magnitude while they are going through the grieving process?

We often have some form of life cover in place to protect us until retirement in the hope that we will no longer have any significant expenses or bills to pay. However there are two things to consider here. The economic climate can play havoc with many people's retirement plans and we may not be as "well off" as we had hoped. Secondly, life expectancy has increased significantly and many people are living well into their eighties and nineties. This, unfortunately, can lead to the requirement for health or nursing care in our latter years, which can be a huge financial burden on our family.

There are 2 major types of senior life insurance available. These are Term and Whole Life Insurance. Term insurance is the simplest and least expensive form of life cover. As the name suggest, you will only be insured for a specific term as stated within the policy. This will usually be for a period of 1-30 years. Should you die within the term while the policy is still active, a tax free lump sum will be paid to your beneficiaries. This can be used anyway they choose, whether they wish to cover your funeral expenses, pay off any outstanding debts or use it as a windfall or legacy. There are also 2 forms of term insurance to consider - level or decreasing. A level term benefit will provide an exact pre-determined sum of money. However, a decreasing term insurance policy will reduce in value each year. A decreasing term policy is typically used in conjunction with a mortgage. As your mortgage balance reduces each year, so does your life cover to reflect this. Should you outlive the term of your policy, there will be no benefit paid.

Whole or Permanent Life Insurance will pay a lump sum to the beneficiaries of the policy whenever you die, no matter when that is. Once again, there is a choice of Whole life policies to choose from - traditional whole life, universal life and variable universal life. A traditional whole life policy will maintain the same level of death benefit and premium payable throughout. This may initially mean in the early years, you are paying higher premium than is actually required to pay a claim. Life Insurance companies introduced the other 2 policies at a later date. These can be considered 2 variations to the original type of policy. They both allow more flexibility as you can choose to vary the premiums you pay.

It is of the utmost importance that you have the correct amount of life cover in your senior years. As mentioned, we are living far longer nowadays and the "cost of dying" is higher than ever. One point that you must take into consideration is that upon your death, if the beneficiaries of your estate are your children, they may have to wait a considerable time until they have access to what is rightfully theirs. In most cases, probate and the issue of someone's estate can take anywhere from 6 months up to 18 months. Unfortunately, this does little to help your children in paying for your final expenses.

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