For those who have reached retirement age or are getting ready to transition into the next chapter, you may wonder if life insurance is still important for these later years. Even if your priorities have shifted or you no longer have a young family to take care of, having coverage can provide financial security when it’s needed most. Here’s a look at life insurance for people who are 65 and older and why it may be a good fit for retirement.
For most life insurance policies, coverage is typically less expensive the younger and healthier you are—which is why putting a plan in place as soon as possible is often encouraged. But for current or soon-to-be retirees who lack life insurance coverage, there can still be options as you age and ways to protect and provide for loved ones. Individuals who are 65 and older may be in a transition phase of still working and providing for their family, while also preparing for retirement. They may have life insurance through their employer, but they will likely lose that group coverage when they leave the workforce.
Taking out a life insurance policy can help reduce the financial impact of your passing on your spouse and children or allow them to set aside money for future expenses. Even though policies may cost more for older individuals, there are still affordable solutions available that can also offer additional benefits.
Final expenses can be costly, especially for retirees who are on a fixed budget or have savings reserved for retirement. With the average funeral costing $7,848, that can be financially stressful for a surviving spouse or family member. Purchasing life insurance as a senior can help protect those left behind and prevent family members from having to cut into their own savings to cover final expenses. In addition to helping cover funerary costs, a death benefit can also be used for a variety of other purposes, including:
With a potential to live an additional 20 years or more after leaving the workforce, retirees may face rising health care costs along with day-to-day living expenses. Research shows that at age 65, households will incur, on average, $310,000 in health care spending over the remainder of their lives. A life insurance death benefit can help a surviving spouse cover health care costs or unexpected medical expenses. Plus, some life insurance policies also offer living benefits where the insured can access a portion of the proceeds if they become terminally ill or confined to a nursing home.
Whether you’re nearing retirement or have already entered the next stage, you may be revisiting your financial plan and preparing for the future. This can be a key time to re-evaluate life insurance options and see if coverage should be a part of a retirement plan. There are two types of life insurance: term and permanent coverage. Discussing financial needs with a financial professional can help determine if coverage is a good match and what kind would best meet your goals.
For retirees who are seeking protection for a set period of time, term life insurance can provide coverage between 10 to 30 years. If the insured passes away during the term, the beneficiary will receive the death benefit. This is often a more affordable option than permanent life insurance and can protect against financial hardship due to income loss, final expenses, or other retirement costs. Since term coverage is usually more cost-effective, it may provide greater financial flexibility if there are still larger expenses to pay off, like the mortgage.
For those who want coverage for the remainder of their life, permanent life insurance may be a good choice. One type of permanent coverage is whole life insurance, which along with providing lifetime protection, it may build cash value that can be accessed for future use, like supplementing retirement income or covering an unexpected event. Many insurance companies offer plan options for seniors up until age 85, so it’s still possible to apply for coverage even if you’re older. Since premiums are commonly based on age and health when a person applies, permanent coverage may be more expensive for older adults than younger applicants.
Life insurance can offer valuable protection against financial uncertainty in the future and bring a little more peace of mind to retirement. Meeting with a financial professional about your specific financial needs and health concerns can help pinpoint which life insurance option may fit into your financial plan. No matter your life stage or retirement timeline, today is a great day to protect loved ones and create a more financially secure future.
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