Life Insurance

If you were to die prematurely, you can make sure your family is taken care of and their needs are met. There are different options, to ensure your specific wants and needs are met. Read below your options when it comes to life insurance.

Medicare Advantage Coverage

Term life insurance is a standard insurance policy that provides coverage for a specific period of time. This means if you don’t die within the term, your beneficiary doesn’t get the death benefit and the policy expires. You can select a term that works best for you and common lengths for term life insurance are 10, 20, or 30 years. One of the challenges for people who purchase term life insurance is deciding how long the policy should last. You may want to have the policy last until you retire or as long as your youngest dependent will need financial support.

Permanent life insurance

Permanent life insurance, as the name implies, provides coverage for your entire life, as long as you continue to pay your premiums. The premium for permanent life insurance is generally more expensive than for term life, but it usually doesn’t increase as you age. Permanent life insurance is also called cash-value insurance and is often considered a financial investment, because part of the premiums you pay are invested by the company that sold you the policy. These investments give you a tax-sheltered way to earn money.
Permanent life insurance policies have a face value and a cash value. The face value is the amount your beneficiaries receive when you die; in other words, the death benefit. The cash value is equal to the amount of premiums you have paid, plus any investment earnings. Some permanent life insurance policies guarantee growth for the cash value. Others involve more risk, which means the cash value of your policy could potentially decrease over time.
One advantage of permanent life insurance is that you don’t pay any interest on your investment earnings, and your beneficiaries don’t pay any tax on the death benefit when it is eventually paid out. In some circumstances, you can even borrow money tax free from your permanent life policy.
There are four types of permanent life insurance:
  • Whole life
  • Universal life
  • Variable life
  • Variable universal

Term vs. Whole Life Insurance

Once you decide to buy life insurance, you will be faced with a number of choices about the type of policy you should get. A life insurance comparison may be useful, especially if you’re considering term vs. whole life insurance. Here’s a look at the similarities and differences between these two popular types of life insurance.

Understanding Term and Whole life insurance

Term life insurance and whole life insurance are two of the most common types of life insurance policies, so it’s important for you to come to a clear understanding of both.
Term life insurance provides coverage for a specific amount of time. Generally, you can select the term that works best for you, and common terms include 5, 10, 15, and 20 years. There are two main types of term life insurance: annual renewable, which starts with a low premium that then increases with age, and level premium, which has a higher but fixed premium.
Whole life insurance is a type of permanent life insurance, and like all permanent life insurance plans, it’s designed to last a lifetime. Whole life insurance policies offer a fixed premium and a guaranteed increase in cash value through investments.

Pros and Cons of Term life insurance

If you’re looking for protection at a more affordable price, then term life insurance may be the right choice for you. Term life insurance is the least expensive type of life insurance, and so it’s particularly well-suited for young people who are looking for a policy with low monthly premiums. Term life insurance is affordable because you’re only paying for the lump sum cash benefit that your designated heir receives when you pass away–you’re not paying the insurance company to invest and grow your money, and you’re not earning any interest on your cash, as you would under a whole life insurance policy.
The downside of term life insurance is that your beneficiary gets nothing if you don’t pass away during the term of the policy. In addition, if your policy expires and you decide to renew, you may have to pay a higher premium if your health has deteriorated.
The biggest advantages of whole life insurance are that you can be covered for your entire life (if you keep the policy long enough) and that your minimum cash value is guaranteed. The guarantee means that part of your cash investment is safe, and that your policy keeps value in case of a market crash. In addition, your value will increase every year, and you will most probably also receive annual dividends that are exempt from taxes. Also, your monthly premium can be fixed.
Another big advantage is that you can borrow against your whole life insurance policy if you suddenly find yourself in a cash crunch or need money for any personal reason.
A whole life insurance policy is particularly well-suited to those looking for stability and wanting secure guarantees for long-term responsibilities, like funeral expenses and a steady income for the surviving spouse.
The main downside of a whole life insurance policy is its higher monthly premium. In fact, according to TheSimpleDollar.com, the cost for whole life insurance can be six to eight times higher than that of term life insurance.

Life Insurance for Every Life Stage

As you go through life, your needs for life insurance will change as your circumstances change. If you buy life insurance when you’re single, you may decide to switch to another plan once you get married or once you become a parent. In order to choose life insurance that best fits your needs at a specific point in time, it’s important to understand the various life stages that you may experience, learn about adequate plans for each life stage, and get life insurance quotes for your selected plans.

When You’re Young and Single

Even though you may think that life insurance is not necessary when you’re young and single, that’s often not the case. You may have debt you don’t want to pass on to any living relatives who might be responsible for the debt in case of an early death or you may wish to leave a legacy—a donation to a cause that stokes your passion. If you buy a permanent life insurance policy when you’re young, you could enjoy lower premiums, benefit from the insurance policy’s cash value, and create a financial safety net that will last your entire lifetime.

The Family Life

If you’re a newlywed, you may be embarking on exciting adventures, like purchasing your first home, possibly changing jobs, and starting a family. However, you will need to be prepared should something happen and one of you is left alone. This is where life insurance comes in. It can help ease the financial burden brought on by the untimely and sudden death of a spouse. For example, you may want to buy term mortgage life insurance to cover your home mortgage payments, so that your spouse and children can have a roof over their heads should something happen to you.
Once you have children, you will also want to provide them with financial protection should something happen to you or your spouse. A family life insurance policy (term or permanent) that pays a lump sum or a regular income after your death can ensure that your children are financially protected.

Business and Work

If you own a business, you may want to buy life insurance to protect the company you’ve built. If you were to pass away, what would happen to your company? With life insurance, you can fund a buy-sell agreement that would ensure that the remaining partners are in a position to buy your ownership stake in case of your demise. A good option in this case may be term life insurance for perhaps 20 years, where the cost of the insurance would be lower than permanent life insurance and still provide protection for your heirs and business partners.
A stay-at-home parent can also buy life insurance to ensure his or her loved ones are protected should something happen to them. The services a stay-at-home parent provides are costly, and hiring someone to fill that role will be become a financial burden if you’re not prepared for such an eventuality. A term life insurance policy that covers the years during which the stay-at-home parent will be taking care of the children is a good choice in this specific case.

Planning for your later years

Most retirees want to enjoy life after they stop working, and to do that you will need to have a secure nest egg. In addition, even though your children may be grown up and financially self-sufficient, it may still be a good idea to buy Final Expense life insurance. If one spouse passes away, even at an advanced age, the remaining spouse may still live 10 or 20 years and will need to have some sort of financial security. In this case, it may be a good idea to add an annuity to your life insurance policy. An annuity could ensure that you continue to receive a stream of income once you no longer receive paychecks from work, allowing you to enjoy your retirement years and offering protection should one spouse pass away.
Also, be aware that even though your children are now adults and financially independent, you may have aging parents who depend on you for financial assistance. It’s always a good idea to plan ahead, in case something happens to you, and your parents are suddenly left without a financial safety net. A permanent life insurance policy with a cash value can help care for your parents in case of your untimely death.

Find Affordable Life Insurance for Senior Citizens

While it may be less expensive to purchase a policy at a younger age, buying life insurance for senior citizens is still important. After all, the purpose of life insurance is to help protect your loved ones in the event of your passing, which often becomes more of a concern as you age. This is especially true for seniors still caring for dependents or with liquid assets.
Life insurance is an agreement you make with an insurance provider. In this agreement, you pay monthly premiums in exchange for a benefit amount that will be paid to your named beneficiaries if and when you pass away during the term of the policy. Depending on the type of policy you purchase, the benefit amount could help cover funeral and burial expenses or beneficiaries’ finances.

Do You Need Life Insurance?

Before you buy a life insurance policy, it’s important to know whether you’ll benefit from having one or not. There are certain situations where it would be advisable to purchase a policy, such as:
  • People who are making their highest earnings and saving for retirement.
  • Retirees who may lose a significant amount of income when a spouse dies.
  • Parents with dependent children.
  • Families with large, liquid estates that may be subject to an estate tax (e.g. antiques, cars, houses).
  • Owners, partners, and employees of a small business.

No matter your age, if one of these situations is applicable to your current lifestyle, it is highly advisable to purchase a life insurance policy.

Four General Types of Life Insurance

In general, there are four types of life insurance policies that people buy: whole life, universal life, variable life, and term life.
  • Whole life insurance provides coverage from the moment you purchase the policy until you cancel your policy or pass away. Premiums for whole life are typically fixed, and the policy maintains a cash value, which can help guarantee financial security for your loved ones.
  • Universal life insurance is the most flexible permanent life policy. Increase your death benefit by passing a medical examination and have your cash value earn a money market rate of interest. After money has accumulated, you have the option to alter your premium payments if there’s enough money in your account to cover the costs.
  • Variable life insurance policy combines death protection with a savings account and allows you to invest in stocks, bonds, and mutual funds. The risk associated with this policy is if your investments don’t perform well, your cash value and benefit may decrease — though some policies guarantee that your death benefit won’t fall below a minimum level.
  • Term life insurance is bought to cover a certain amount of time, usually ranging from 5-30 years. Premiums are typically lower than whole life, but your policy term won’t hold cash value if unused by the end of your policy term. Some term life policies hold the same death benefit amount if the insured dies during the term, while others decrease. Term life policies can also be convertible, allowing the insurer to change from a term life policy to a whole life policy.

Find the Right Life Insurance Policy for Senior Citizens

So, which life insurance policy is best for senior citizens? You may consider taking a term life insurance policy that can be converted into a permanent policy. Term life insurance is typically more affordable, and the lower amount you pay in premiums can still help maintain your loved ones’ financial security.
No matter which policy option you choose, life insurance for senior citizens doesn’t have to be a challenge.

What is final expense life insurance?

Sometimes referred to as “funeral insurance,” final expense life insurance is meant to cover the costs associated with funerals and burials. The costs of final expenses are ones that many seniors do not account for and without insurance can easily exceed $10,000. While the cost of a final expense life insurance policy is generally nominal, the payouts are generally between $5,000-$25,000.

How does it work?

Final expense life insurance requires the policyholder to name a trustworthy beneficiary who will receive the proceeds of the benefit. Like other types of life insurance, final expense policies are available as both term and permanent options. A term policy will cover you for a certain number of years whereas a permanent policy remains in effect as long as the premiums are paid. Permanent policies have the added benefit of including a cash value component, meaning cash is able to accumulate over time on a tax-deferred basis.

How do I qualify?

Final expense life insurance is often easier to qualify for than traditional insurance and policies are underwritten either as guaranteed or simplified issue. Guaranteed issue means that anyone can qualify and no medical questions are asked during the application process. While this type of policy generally comes with a higher premium, it is a good option for those who would not otherwise qualify for life insurance coverage due to health issues. Simplified issue policies do require some medical history during the application but a medical exam is not necessary.

Why You Need Protection for Final Expenses

DID YOU KNOW…?

  • Social Security pays a one-time payment of $255 to the surviving spouse if he or she was living with the deceased. *
  • Your household Social Security Income can be cut by as much as 50% with the death of a spouse.
  • Ten years ago, the average adult funeral cost was $3,000. Today, the average funeral costs between $6,000 and $15,000.
  • By the year 2020, funerals will average over $12,000 to $18,000 due to inflation.