For individuals over the age of 55, the idea of spending money for life insurance may be overshadowed because so many are dealing with the increase of cost of living expenses. Individuals over the age of 55 could benefit from life insurance so that their loved ones or caregivers do not have to worry about what could happen in the future once an individual passes on. To help a person decide on how life insurance can beneficial, he or she can consider several things. When proper research is done to become an informed consumer, the cost of life insurance is not as a drain on the wallet and an important part of an individual's future.
Basics of Life Insurance
Life insurance is an agreement between an individual and an insurance company to provide a monetary benefit after the death of the individual. This monetary benefit can help the surviving family members and caregivers with:
- burial costs
- medical expenses
- living expenses
- monetary contributions to grandchildren
The individual pays a premium over the course of the agreement to ensure the security of life insurance. A premium is referred to as a set amount of money that is required by the insurance company to cover the cost of the life insurance policy. A premium can be adjusted based on the age of the individual as well as the amount of life insurance that an individual wants to have put on the policy.
Types of Life Insurance
There are two types of life insurance: term and permanent(often referred to as whole life insurance).
Characteristics of term insurance are:
- premiums are lower than permanent insurance
- can come in different increments. Ex. 5, 10, 15, 20 year policy
- monetary support for just death benefits
- can be used to supplement a life insurance policy from an employer
- can be converted to a whole life insurance policy at the request of an individual
Characteristics of permanent/whole life insurance are:
- premiums are more costly that term insurance
- the cash value of the policy increases over the lifetime of the individual
- can be upgraded based on the needs of the individual
- may be subjected to a health examination to determine the value of the life insurance policy despite the age of the individual
- may take longer to build up the cash value of the policy depending on the parameters of the policy
Choosing the Best Policy for Your Needs
For individuals over the age of 55, choosing the best insurance policy can be an easy process. Here are some tips to consider:
- Figure out what type of insurance is best that will fit not only your current budget but also what can you afford in the future. For some individuals that are currently working, a supplemental term life insurance policy may be an option or he or she is able to afford a permanent or whole life policy.
- Figure out what type of expenses you would want to cover for your loved ones after your death.
- Depending on your age, do you need the money right away or you can you wait for the cash value of a permanent whole life policy to increase? A term life insurance policy is a great option for individuals who are older than younger individuals. Whole life insurance policies are a great option for individuals who can allow the cash value of the policy to increase over time.
