Insurance is a form of wealth management, which allows individuals to set aside some of their earnings to help their family prepare for the unexpected. As you get older, assessing your financial stability is important to ensure that you have enough to retire comfortably, while also guaranteeing that your surviving loved ones are cared for when you pass on. There are many different types of life insurance products offered today. For someone who is nearing retirement age, is it still possible to get an insurance policy that is worth the money? Here are the top four insurance products that are perfect for seniors.
Guaranteed universal life policy
With regard to insurance policies, guaranteed universal life for seniors is similar to a traditional term life policy, which guarantees a cash payout when the insured person passes away. The main difference is that a guaranteed universal life policy offers fixed rates that are guaranteed until the age of 90, 95, 100, or later. Most term policies expire by the age of 80, so a guaranteed universal life policy is a better choice for seniors and retired individuals who want to leaving money behind to settle their final expenses, burial costs, and estate taxes if applicable.
Whole life insurance policy
Whole life insurance is exactly what it sounds like: life insurance that is designed to last your entire life. For this type of life insurance, if you make your payments each month, a small payout of up to $50,000 will be provided to your beneficiaries when you pass away. Some whole life insurance policies also offer additional features such as the ability to borrow against the value of the policy, but its important to know that the cash value in these policies is very minimal, and if you take out a loan against the value, the amount of the loan will be deducted from the total benefit of the policy until it is repaid.
Final expense insurance policy
Life insurance is commonly purchased to leave money behind for final expenses like burial costs, funeral services, and unexpected medical bills. This prevents the surviving family from having to shoulder these costs or settle for a less-than-adequate funeral. A final expense insurance policy is available to anyone, regardless of health condition and age. You can also choose from a range of benefit amounts, starting from as little as $5,000.
Universal life insurance policy
A universal life insurance policy is a participating product, which means that your insurance company invests the money you pay into your policy. If your investment performs well, your policy can last for your entire life, and you may even build up a small cash value. If the investment does not perform as well as expected, it is also possible that your premiums may dramatically increase.
Similar to a whole life insurance policy, if your policy performs well, you’ll have an option to borrow against it – but this money must be repaid with interest. Universal life insurance products pose a moderate amount of risk to the insured, but the cash value increases significantly if the investment performs well. If you are still willing to take the extra risk and invest, this insurance product could be for you, but most experts warn against it.
According to most financial advisers, you’re better off buying an inexpensive term or permanent policy and putting your extra money into your retirement. Maxing out your 401(k) is a better investment in the long run, and if the market doesn’t perform well, you won’t have to worry about your family’s well-being.
When comparing which insurance policy to buy, you need to be specific about your family’s financial needs, any debt you have, and most importantly, your budget. If you are unable to afford your premiums each month, you risk losing your coverage when your family needs it the most.