The truth about life insurance for seniors is not what you’re thinking.
Major insurance companies use well respected paid celebrities to pitch life insurance to seniors. Ask the question, are they really helping?
The purpose of life insurance is to insure the earnings of the insured in the event they die.
Income earners buy life insurance so the family will not be without their financial support. The insurance money makes up for lost income.
Today we’re talking about buying life insurance as a senior. What are the things you need to know.
Why Life Insurance
The insurance pitched by well known celebrities, is not always in the best interests of seniors.
Once retired, the loss of future income is no longer the reason to buy insurance. The pitch creates a new reason. Insurance will protect the family from final expenses, like a funeral.
The question has to be, at what cost?
Different health, different needs, different retirement incomes.
The Perfect Pitch – The ads tell us No health questions. No one is denied. You can’t be cancelled.
Some boast that you are accumulating a cash value.
There are two types of life insurance. Whole life and term.
You may see others, but they are merely a variation of whole life.
Whole life will have higher premiums. The concept is, you are also investing money into a savings account. Part of your premium is for death benefits, the rest is savings.
Term insurance is pure insurance, no savings. Like car insurance. If you need it, it pays. No saving deposits from the premium.
Whole life is very expensive in the first two years. Why? None of the premium goes to savings. All goes towards insurance costs and death benefits, none to savings.
It has pretty much been shown over the past twenty five years, as term has grown in popularity, that whole life insurance is a poor way to build a savings account.
Here is what’s important.
The policies pitched on television, and other places that are targeted to seniors, have limited benefits for two years.
The first two years is sometimes called and elimination period. You answered no health questions.
What if you have terminal cancer and hope to beat the system with a policy like this?
No way. The benefits may be no more than the amount of money paid for premiums. For two years.
The ads offer low premiums, “Less than a dollar a day“.
Ask, for how much insurance?
Usually it is quoted ‘per unit’. If the unit is $1,000, in this illustration, you are paying $25 per month for $1,000 of life insurance. (they said less than a dollar a day so We’ll use $25 per month)
Then, going back to the ‘no health questions’ you have no coverage, or very little, for two years.
Healthy Living After 60 Is A Website Dedicated To Seniors.
This means we’ll give it to you straight.
If you have life insurance and you think you need it, keep it. It will never get cheaper. It will get much more expensive if you start over.
Generally, for most fixed income retires, life insurance is far to expensive to make it a good option.
Here are the numbers: Cost for $10,000 death benefit @ $25 per 1,000 = $250 per month.
Funeral costs could be that much but usually not. Let say $5,000. ( A really low cost funeral can be under $1,500)
Don’t buy the insurance.
Put the $250 per month into savings. (price of insurance) In 2 years you will save $6,000.
One more step. If you live three and a half years, you are ahead of the insurance policy. With $10,000 in savings you can stop putting the money in the account. Can’t do that with insurance.
Final Verdict On Life Insurance For Most Seniors
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