Life insurance can leave a lot of people scratching their heads in confusion. There is a lot of jargon to decipher, and the insurance industry has seen its fair share of scandal and fraud, leaving many people skeptical about its effectiveness and relevance in today’s world. This article sheds some light on some of the most pressing questions about insurance for seniors who reside in Arizona.
What is the difference between whole life insurance and guaranteed universal life insurance?
Whole life insurance can provide lifelong coverage and long-term peace of mind because the death benefit will payout regardless of when you die, as long as you pay the premiums. Like other permanent policies, whole life builds cash value by investing a portion of your premiums into a savings account. You can then withdraw the cash or take out a loan against the value. However, it can take time for the cash value in life insurance to build — sometimes a decade or more.
This type of life insurance is typically more expensive than term products, especially if you purchase a policy later in life. This is because your health can decline as you age, and your life expectancy is shorter, which means the insurer might have to pay out the policy sooner.
Guaranteed universal whole life insurance is a blend of term and permanent life insurance. Guaranteed universal, sometimes called “term for life,” is similar to term coverage in that the policies expire after a certain amount of time. However, instead of choosing several years to cover, you select an age at which the policy will expire, such as 90, 110, or 121.
Guaranteed universal life has lower monthly premiums than whole life, but it typically offers a small cash value while providing high coverage amounts. Guaranteed universal policies usually require you to pass a medical exam to qualify, and coverage is not always assured. The word “guaranteed” refers to a guaranteed death benefit permitted you pay your premiums.
How much insurance do I really need at my age? And how does one calculate this?
This figure can vary significantly as it is dependent on a couple of factors. Finding affordable life insurance for seniors is not always easy, as the cost of coverage typically increases as you age. But affordable options may be available, especially if you’re in good health. Here’s the average cost of life insurance for older adults, including seniors over 80, noted by gender:
- For women aged 65 and older, whole life insurance coverage of up to $100,000 can cost anything from $349 and upwards a month.
- For men aged 65 and older, whole life insurance coverage of the same amount can cost anything from $414 and upwards a month.
- For women aged 65 and older, guaranteed universal life insurance coverage of up to $10,000 can cost anything from $66 a month.
- For men aged 65 and older, guaranteed universal life insurance coverage of up to $10,000 can cost anything from $88 a month.
I’m retired and have no debt. Do I really still need life insurance?
If you’re debt-free and have healthy savings or funds set aside for final expenses, you might not need life insurance coverage. Although it’s always best to double-check with a professional if you’re unsure. A life insurance policy might make sense if you:
- Have outstanding debt that others would have to repay.
- Support a spouse, child, or other dependents with your income.
- Want to cover your funeral and burial costs.
- Have a high net worth and want to cover estate taxes.
- Want to provide an inheritance to those you leave behind.
I already have a lot of savings in different accounts. Is life insurance still relevant/necessary?
It may be challenging to say. Rather chat to a professional financial advisor to determine whether these accounts or savings will serve the needs of those you leave behind after your passing or whether your loved ones will still feel the pinch in your absence.
If your death would financially harm no one in your life, you can likely put off investing in a life insurance policy. For now, you may find that saving and investing your money in other assets — stocks, bonds, your retirement funds, or real estate, perhaps — is a better move.
As part of our trusted coalition here at Senior Resource Connectors, they will be able to guide you on the next best steps for your new journey. Alternatively, get in touch with our clinical concierge at no cost to you for the best referral within our trusted network of companies.
