Do older people need life insurance policies?
We tend to think of term life, purchased by younger people. Perhaps we think of younger parents with kids who need support, a large home mortgage, or other debts. In this case, a term policy is meant to protect that growing family in the event that one of the breadwinners dies. But is the only use for coverage?
Americans are living longer and more productive lives today.
We have seen statistics that show Americans can expect to live longer than they could a decade ago. In addition, people tend to work longer, and be productive well into traditional retirement years. Where there is an income, there tends to be people depending upon that income.
In response to the increased life spans, many top insurers are also dropping rates. They offer policies to older people too. Where we may associate term with young people, it is not impossible for a reasonably healthy 70 year old to find a 10 year policy either!
Some reasons that middle aged to senior aged people shop for policies:
Business – Companies may need business owners or key man insurance in order to secure financing or protect their enterprise. They may need to cover an older person, and this coverage is out there.
Estates – There are usually tax advantages associated with the death benefit. Most of the time, the beneficiaries can collect without being taxed. A policy can be an affordable way to make sure that the children can inherit a sum of money.
Small Business – There are many cases where only one heir will actually inherit a business. The death benefit can be a way to provide a buyout to the other children in a family. Say one daughter of a law firm owner becomes a lawyer herself. In time, she steps up to take over the law firm. To be fair to her siblings who have become teachers, the policy can buy them out.
Final Expense – Many seniors purchase a small face value whole life policy in order to provide money for their funerals, and to settle other debts. These are common, an designed to be easy for seniors to apply for.
So you can see that there are many reasons that people over 50, and even over 70, shop for life insurance policies sometimes. Is it hard to find coverage at older ages?
Since Americans are living longer, insurers are more willing to extend coverage. While a 70 year old cannot find 30 year term, they may be able to find a 10 – 15 year policy. They can also seek a permanent policy like whole or universal life.
This can be a part of a solid financial plan. There are other uses for senior policies too, like being able to explore the possibility of life settlements. Life settlements are cash settlements that are paid to older people for the sale of their policies. Not every person, and not every policy, qualifies, but for some this can also be a good way to do financial planning.