Generally, as people get older in life and begin to move into retirement age and beyond, things change. Your children are likely grown and you have less debt to worry about. However, for some seniors, life insurance is still something they want to consider to cover burial costs or to leave behind financial protection for loved ones.
Here's what you need to know about life insurance so you can determine if it's right for your needs.
What is senior life insurance?
Some common examples include burial or final expense insurance. As the costs of funeral and burial expenses rise, many seniors take out a policy to cover them so that their loved ones don't have to pay for the costs.
This type of life insurance can provide an extra layer of coverage to older Americans, especially if you have a term life insurance policy that could run out at age 70, for example.
What kinds of life insurance policies might seniors consider?
- Traditional life insurance: If you are in good health and under a certain age, you may qualify for a traditional life insurance policy with affordable premiums. This type of policy can help your beneficiaries cover the costs of your final expenses.
- Simplified issue policy: If you have medical conditions that could make it difficult for you to qualify for a traditional life insurance policy, or if you've been turned down for coverage in the past, this may be a good option. A simplified issue policy allows you to apply for coverage and bypass the medical exam — however, premiums tend to cost more.
- Guaranteed issue policy: A guaranteed issue policy will provide some amount of coverage. The only requirement for this policy is that you pay your premiums on time. However, because there are no qualifications, premiums tend to be substantially higher than other life insurance policies.
How do I qualify for coverage?
In the case of final expense life insurance, policies are typically offered two ways: simplified or guaranteed issue policies. Even though you might not need to complete a full medical exam, you will likely need to answer a medical questionnaire with your application, which might determine your rates.
How much coverage do I need?
Today, the average funeral costs nearly $8,000. Additional costs can vary depending on the type of funeral and burial you'd like. If you want to have a service and viewing that goes beyond most basic funeral service packages, you'll need to cover those costs.
So, it might not hurt to consider the type of funeral and burial you'd like, and even contact your local funeral home to discuss potential costs.
Do I really need senior life insurance?
While many seniors may consider these policies, they are not for everyone. Depending on your needs, you might have other ways to pay for these final expenses, such as:
- Having the available funds set aside for your final expenses
- Having long-term care insurance
- Having made pre-paid arrangements with a funeral home
- As you age, you may start to think about the costs associated with your final expenses. You may also start to worry about leaving this financial burden to your spouse and other loved ones.
Getting a life insurance policy can help cover these costs and provide some peace of mind knowing your loved ones will have the funds to pay for your funeral during a stressful time.