Why Finding Life Insurance for our Senior loved ones in those later years really isn’t as difficult as it may seem.
What’s the best way to plan for Life Insurance in your senior years? Well there is no one set answer, because each situation is different. There are health concerns, which will make insurance unaffordable in many situations. There are financial situations, which could mean transferring of assets. There could be a tax situation, which would make a completely different set of circumstances a better option. I will try and cover the above situations, again because each circumstance would make that situation unique and I don’t believe that there is a one size fits all. However, there is a situation which is common and that’s where the senior has had insurance to protect his family, and now they no longer needs the coverage. Again I will try and go over the information to help you to make a sound decision, a decision that is in the best interest of the insured and his family.
Let’s take the latter first, because that is the simplest to understand. Let’s say you’ve had a term policy for 30 years, the kids are all adults and your policy is about to expire. In this case my suggestion is that you contact a Final Expense Insurance Agent who can properly guide you on how you should proceed. A suggestion would be to carry insurance for the expenses after the death of the insured, such as funeral expenses, taxes, debts of the insured etc. The creditors, including the IRS may very well come after the assets of the deceased to pay for the debts that are owed. This will spare the family the burden and stress of having to take care of this because of the family not having planned for it. It’s a difficult thing to discuss, but insurance is sometimes needed to protect a lifetimes worth of hard work and to make sure that the family doesn’t have to go through unnecessary stress during this time period. I would not advice continuing with that policy, has the price will usually rise substantially.
Final Expense Insurance, is a policy which covers the expenses of the insured. It’s not Another situation would be where the insured had Whole Life insurance and they have accumulated an amount of cash value. This is a different situation than above because of the amount of money that has accumulated in the policy. It is important for the policy owner and the family to take the value out of the policy before the insurance starts to eat it up. What will happen is that the cost of the insurance for seniors is more expensive, this will cause the cash value of a policy to be used for coverage, instead of growing. Again in this situation I would suggest you consult an experienced Life Insurance Agent, an Accountant or possibly a Tax Attorney due to the tax consequences. Life Insurance accumulates Tax Free, however there is the possibility of tax consequences because the funds increase the income of the individual which then may become taxable when withdrawn. I would recommend that the money be withdrawn from the policy and then the policy be replaced by a new policy to cover expenses. Again this is a tricky situation, so I would suggest that you consult a professional, because there can be a loss of income if this isn’t handled properly. The money should be taken out when it is at the maximum amount of increase. I will touch on getting a policy for seniors in the following chapter, it’s called a Final Expense Insurance policy, and we specialize in this type of policy.
Designed to take care of the loved ones that are left behind, these policies can be used to pay off bills of the insured which can help the remaining relatives of the insured, however these policies have a different objective. The policy will cover such expenses as taxes, credit card bills, personal loans and one of the main expenses is the burial of the deceased. These policies are expensive, because they usually are purchased by senior citizens that have a higher risk than the usual person looking for life insurance. There are policies where acceptance is guaranteed. There are policies that actually carry a small amount of cash value, as they are whole life policies. There are quite a few possibilities, so again, consult a professional. This type of policy is an especially good choice for senior citizens as it will take care of the expenses that they leave behind. It is a great choice to replace a whole life policy where the cash value has been withdrawn.
So I hope that I have answered your questions. I would be more than happy to speak with anyone of you regarding which direction you would like to take. I have been sworn to do what is best the for the client and to not take advantage of the situation. I will not replace a policy for you until I am sure that you understand what the consequences of that choice are. I would also gladly speak with the children of a senior citizen. You can reach me at Bill@awareinsurance.com and of course my website. www.awareinsurance.com