You’ve spent your adult life caring for your family. Don’t stop now. Plan ahead and make sure your family is taken care of, even after you’re gone. Today, we’re looking at five questions to ask before buying life insurance for seniors, so your family remains well cared for.
What to Ask Before Buying Life Insurance for Seniors
1. How Much Does Life Insurance Cost?
How much your life insurance will cost depends on several factors. Among these factors are your perceived risk, what type of life insurance you need, how much insurance you need, and if your policy has a cash value in addition to the death benefits paid out.
2. What Type of Life Insurance Is Right for Me?
If you previously had life insurance through your previous employer, you probably know not all life insurance is the same. Researching the best life insurance for seniors is easier when you know which type of life insurance is right for you and your family. Permanent life insurance is typically right for seniors because it provides long-term financial protection.
Permanent life insurance includes a death benefit, but some policies also include cash savings. If your policy includes cash savings, your premiums may be higher. However, many seniors find this benefit is worth more than the marginal increase in cost.
3. How Much Life Insurance Do I Need?
Only you can know how much life insurance you need to provide for your family after your death. Here are some questions that will help you determine the answer:
- How much do I contribute to my family’s income?
- How would my surviving family get by?
- Who depends on me financially?
- Do I have enough savings to cover any final expenses and repay my debts?
- How will my grandchildren finish college?
- How much will my estate have to pay in taxes after my death?
- Will my savings be adequate after accounting for inflation?
- Would I like to leave money to any surviving family or organizations?
Many insurance agents recommend five to eight times your current income in life insurance. However, some seniors have already paid for their gravesite or paid for their grandchildren’s college. Other seniors don’t have financial dependents. Your situation is unique to you. Don’t let life insurance agents pressure you into getting more life insurance than you need.
4. How Are Death Benefits Paid?
In most cases, death benefits are paid out in a lump sum. However, as the policyholder, you have the right to determine the payout structure upon your death. For example, you may have half of your life insurance paid out upon your death. This will allow your beneficiaries to cover your burial costs, debt, and estate taxes on your death benefits. You may have the other half released a year after your death to pay off a house, cover your grandchildren’s tuition, or however else you need to provide for your family financially.
If you have children who are not financially dependent on you, look into using your death benefit payout to open a non-qualified retirement account for your children. If you have a spouse who is dependent on you financially, research an installment plan for payout, so they still receive regular income. If you have one, talk to your financial planner about what would be best for your family after your death.
5. Will My Premiums Change or Increase Over Time?
Your premiums will change depending on if you choose term or permanent insurance. Your premiums for term life insurance will remain the same for the “term” of the loan. This may be 10, 15, or more years. However, if you are still alive and would like to renew your life insurance policy, your premiums may go up significantly for the next period.
Learn More About Life Insurance
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