How Life Insurance Helps Seniors to Battle Financial Crisis

Many people today take life insurance for granted until they reach the point where they start to think about retirement or their families' future. What others don't realize is that life insurance can be both advantageous to the beneficiaries and the policyholder.

Just like everyone else, seniors also fight their own economic battles. Most of them still deal with their financial problems, while some further invests. Funds from retirement allowances, social security benefits, and such will be a great help, but it is best if there is a back-up plan, like investing in life insurance.

How and to which ways it could help you are something that we will cover today.

7 Ways Life Insurance Helps Seniors

To highlight the usefulness, insurance companies promote life insurance more of a retirement benefit and not only as what most people view it - death benefits.

Aside from the compensations that the family members will get, the insured seniors can also get financial help during hardship, investment plans, and debt management.

To know more, here's a list of other benefits of life insurance to seniors.

Pays Funeral Expenses

There are too many expenses a person pays while he lives, and even when he dies. Most people fail to recognize all the expenses until such time when they need to make arrangements for their loved ones.

The sad part is, the deceased will not be there to help settle all the unpaid bills and funeral services as they will become his family's additional responsibilities to deal with while they mourn. However, the good part is life insurance can help to pay all the expenses and there are many choices at Seniors Life Insurance Finder.

To take this burden off the grieving family's shoulder, some life insurance companies offer to cover the final send-off, along with the death benefits. It means that the family has something to use to arrange the funeral while they wait for the claims.

Funeral insurance does not only cover fees for the memorial, burial, and cremation. It may also include the mortician's service, who will prepare everything from embalming up to the casket, and the doctor who will certify the death certificate.

Other expenses that may add up on the bill are officiating service fees for any funeral ceremonies, headstones, and wreaths.

One of the best things about having life insurance with funeral fees coverage is that the insurance company can only charge insurers based on the current rate. Meaning, no matter how much the expenses for a funeral increase as time pass by, the family will be safe from rate inflation.

Income Replacement

Regardless of the amount, income loss is still a loss, and it will create a financial impact, particularly to the surviving partner or spouse. Life continues after death, so as the bills for utilities, groceries, and such.

To protect the family from lost earnings, insurance companies provide coverage for income replacement, which will assist them in making ends meet.

The income replacement benefit is determined based on the value of the policyholder's expected income or what they called human life value.

By multiplying the yearly income by the length of coverage or the number of years you want a replacement, you will get the estimated income replacement amount, which can be between 5-10x of the yearly income.

Paying Debts

Since no one can predict death, a lot of debts remain unpaid after the borrower's death, which will then become the family members' obligation. To avoid families from inheriting debts, an insurer can use life insurance to settle all his balances.

With term life insurance, insurers are allowed to sell their policies in exchange for a lump sum that they can use to pay off debts. It may serve as a way to get rid of their financial problems, but it will also cancel all the benefits their loved ones supposedly get from the insurance.

On the other hand, permanent life insurance has other options like thru loans or borrowing money against the cash value.

Good Investment

Most retirees believe that it is the best time to invest in a business in their senior years as they have all the time to focus and to compensate for their lost earnings from work.

For this reason, life insurance can serve as a good investment for them, particularly those who have a whole life or permanent insurance with cash value to build and borrow.

The lenders will have no questions to ask as to how the seniors plan to use their money, whether for a new business venture or leisure and travel. Cash value is available for as long as they are up-to-date with their premiums and have satisfied the required number of payments.

Has Living Benefits

Another advantage of permanent life insurance that most seniors get is the living benefits, also known as the accelerated benefits, where they can get money to pay their hospital bills if they become critically or terminally ill.

Insured may receive financial help even up to the full amount of their policy if they develop life-threatening conditions like invasive cancer, stroke, or heart attack. Getting 100% of the life insurance benefits may cover the medical needs, but it would also mean nothing left to your beneficiaries.

Using life insurance for medical purposes is an alternative to those who do not have any health insurance coverage.

Peace of Mind

What's a better way to spend retirement life than having a peace of mind from what will happen in the next years and after leaving this ground. It is the same thought that had consumed up a lot of sleep time from seniors who failed to recognize the value of life insurance during their early lives.

Peace of mind, in senior years, it is vital so they can enjoy the remaining years. Yet, only a few get to have it, those who smartly invested in life insurance. However, it is still obtainable but it will surely come at a high price and with limited options.

Tax Benefits

Since it is a sort of reimbursement, well-planned life insurance is free from any form of taxation under most circumstances. It means that beneficiaries shall receive the full proceeds and do not need to report the death proceeds when filing taxes.

Benefits paid to an estate, on the other hand, require estate taxes. Additionally, one of the reasons why most insurers opt to borrow against their cash value is also because of the tax exemption from any interest, shares, and even capital gains.

However, if the insurer was not able to satisfy the borrowed amount before it lapses, the borrower will have to settle the tax for the remaining balance.

Conclusion

Indeed, there are many benefits life insurance can offer to seniors while they're still around trying to balance their finances. Although it can help them fight the economic crisis, it is best to keep it until the end. After all, the ultimate purpose is for the financial protection of the bereaved family.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes