Friday, 22 February 2019
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Do seniors need life insurance coverage? Or just burial insurance? – Real Daily

Do seniors need life insurance coverage? Your golden years should be about enjoying the memories of one’s lifetime. Yet the reality of life is that we struggle to pay our bills in youth, middle age, and especially in our old age.

The responsibility to keep up with the standard of living doesn’t end when one becomes a senior. In fact, it can be exacerbated. Over 25 million Americans over the age of 60 live on or well below the federal poverty level. Another 2 million senior citizens receive an average of $400 in Supplemental Security Income.

There are about 50 million Americans who are 65 years old, or older. Still, half of senior citizens who receive Medicare have a total annual income of $26,000 per person.

More than half of all married senior citizens, and about 75% of single or widowed senior citizens, get over 50% or more of their total income solely from Social Security benefits.

More than 23% of married senior citizens, and 46% of single and widowed senior citizens, receive 90% or more of their total income from Social Security.

One is right to ask do seniors need life insurance coverage. After all, premiums are just another bill, and can be an expensive one in retirement.

Is life insurance necessary for senior citizens?

Popular culture would have us believe that being a senior citizen is wondrous era of life, but it can be a struggle just to live.

Most senior citizen live on fixed incomes, are semi-retired, or still working. More than 5 million members of the current American workforce are 65 or older and working full-time.

To make ends meet, many senior citizens must prioritize what bills they must pay over others, such as food, medical care, pharmacy, mortgage, car loans, and so on. When you live on a fixed income, and don’t have the energy to work as much as a younger person, something has to give.

So should senior citizens continue paying for life insurance in advance age? Life insurance premium payments are very costly for older people.

The cost of life insurance for senior citizens

Life insurance is a financial protection for loved ones and family against income disruption due to the death of the policyholder. However, life insurance actuaries assess applicants on their health, youth, and ability to pay premiums for a long time.

Even if a life insurance company has to pay death benefits, they essentially break even or cover the cost from decades of premium payments. That is why life insurance is so affordable for young, healthy applicants.

The older that you are, the closer you are to death, statistically. A morbid thing to consider, but a reality that life insurance companies take seriously.

As senior citizens get older they are susceptible to injury, disease, and mental and physical decline. So, life insurance companies charge senior citizens more for coverage to balance against the risk of paying death benefits sooner than later.

The average 25-year old non-smoker can expect to pay $22 a month, or less than $300 a year, for a term life policy of 20 years. A 25-year old who smokes can expect to pay about $70 a month, or about $830 a year for the same.

Meanwhile, a 65-year old non-smoker could pay $440 a month, or over $5,300 a year, for the same. A 65-year old smoker might pay $1,400 a month, or $16,500 a year for the same coverage.

These are average figures. Premiums vary from company to company, but one constant is that senior citizens always pay more.

No one insinuates that a senior citizen should forgo life insurance coverage because they are old. It’s just that senior citizens on fixed incomes usually have to prioritize their bills in terms of importance.

A necessary expense?

Senior citizens, especially retirees, need to spend at least $44,000 a year to satisfy their standard of living expenses. The average retired couple should expect to pay over $280,000 for their medical expenses throughout retirement, not including long-term care.

More than 80% of American homeowners are senior citizens. Meanwhile, the average mortgage is about $1,200 a month.

When stretched thin by fixed incomes, how necessary is an expensive life insurance premium? Well, it depends on what the policy is needed for in the first place. Also, there may be other more appropriate life insurance product alternatives.

Do you have enough in savings to pay your day-to-day expenses, especially as you age? Do you have grown children who are financially secure? Are your eventual funeral expenses already taken of?

Do you have investments that can be liquefied or leveraged to satisfy your final expenses? Then, you may not need the hassle of paying for a life insurance premium. Chances are that you already have enough bills to worry about.

Alternatives to senior life insurance

Still, many senior citizens need the security of the benefits offered by life insurance without worrying about high premiums. If you have loved ones and relatives that you don’t want to burden with the cost of your funeral, then you need at least minimal life insurance.

You also may want to offer the security of death benefits to a spouse.

Term life insurance in 5-year, 10 year, and 15-year terms can be affordable, relatively speaking. The problem is that if you outlive the coverage term you get nothing.

Plus, you’ll have to re-buy at increased premiums because you’ll be older.

Some companies offer term life coverage with return of premium riders. Return of premium means that if you outlive the coverage term, all premium payments are refunded.

Burial insurance is a simpler form of life insurance. A policy under $20,000 is affordable and may cost just a few dollars a month.

Consult an agent or broker to find coverage tailored for your needs.

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Source: https://realdaily.com/do-seniors-need-life-insurance-coverage/

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