The number of 55 plus Americans has been steadily increasing as the baby boomers move into that age bracket. Additionally, more people are living longer lives. These trends have caused term life insurance prices to fall by approximately 33% in the last 10 years. To keep pace with the growing senior market many life insurance companies are expanding their product lines to provide protection that meets older people’s needs.
Older consumers now have many new alternatives to choose from. Industry sources explain that even as recently as 10 years ago, many of these options for senior life insurance were unavailable. For instance term life insurance coverage is now being enhanced to be suitable for purchase at older ages with longer guaranteed insurance periods – twenty-five to thirty years, lower costs at all ages and higher issue ages. As matter of fact, many companies offer life insurance to people age 80 and beyond. For older people, there are a variety of reasons life insurance makes sense:
Funeral expenses – Sometimes the family needs money to pay for funeral expenses and other costs related to death.
Estate taxes – Big estates have big taxes starting at 37% for estate assets over $675,000. Our recent bout of inflation may have pushed some people into the estate-tax bracket without them even realizing it. Life insurance when it resides in an irrevocable life insurance trust is outside of the estate and can be used to provide monies to pay for any estate tax liability.
Lifestyle maintenance – These days both spouses may work and when one dies the other may be left with a reduced income. The cash from the policy could be invested to produce an income stream that would help make up for the loss of the deceased spouse’s salary.
Retirement Income – If you have the permanent (whole life) life insurance the asset grows tax deferred. By the time you retire you will have a nice cash value which you can turn into an annuity or simply put it in a money market fund for emergencies. If you don’t have whole life but have term instead you can cash in other conservative assets such as CD’s and purchase fixed income life insurance which covers your insurance needs and strengthens your financial base.
Finally there is an interesting new twist that some seniors are employing with their life insurance policies called Life Settlement. Essentially a senior sells his/her policy to a third party for a specified amount and the investor receives the pay out value when the person dies. There is a great deal of controversy about this practice so make sure you understand how it works and check with your attorney before you choose this option.