Inflation has hurt millions of Americans but it may have been particularly damaging for seniors and older adults, many of whom live on a fixed budget tied to retirement savings and Social Security. For this demographic, each item purchased has to be carefully reviewed on a cost-benefit analysis.
This is particularly true for insurance policies, not all of which are advantageous for older adults.
Life insurance is often thought of as one of those types. The cost, relative to the coverage that can be secured, is considered not to be worth it for seniors. But that’s a slight misconception. There are times when life insurance is worth it for seniors – and it doesn’t always have to break the bank, either.
If you’re a senior considering life insurance – or know an older adult who is – then start by getting a free price quote so you know what to expect.
When is life insurance worth it for seniors?
While every senior’s personal circumstances and finances are different, here are three instances when a life insurance policy may be worth it.
Life insurance is often thought about in extravagant terms with policies being cashed out for hundreds of thousands of dollars (or even millions). But life insurance can be used for more practical, defined reasons as well and it doesn’t need to cost a lot (or have a major payout) to be worth it.
For example, seniors looking for a way to cover end-of-life expenses may find that a term policy in an amount that can pay for these items may be valuable. A policy for $20,000 that could cover a wake, funeral, coffin and burial could prove to be valuable and the monthly cost to maintain it would be negligible.
When seniors want to leave an inheritance for loved ones
While some seniors may like having life insurance with a defined goal in mind (e.g. to pay off a home or to use for the above-mentioned end-of-life expenses), other times it can serve as a simple inheritance for beneficiaries and loved ones. In this case, relatives and friends can use the money as they see fit after the policyholder has died. Using life insurance this way is especially worthwhile for seniors who don’t otherwise have savings or home equity that they can pass on to family and friends. In these instances, life insurance is worth having to help fill that gap.
When seniors have substantial debt
If you’re an older adult with substantial debt (think mortgages, personal or student loans, credit cards or more) and are concerned that your loved ones may have to deal with it in your absence then life insurance may be worth getting. A robust six-figure life insurance policy can potentially be obtained for less than $100 a month. That money could then be used to pay off a home or other loan that otherwise would have been left outstanding. Granted, not all debts will automatically pass on to family members but some will. Do your homework and find out what your loved ones may be responsible for and then apply for a term policy that can help cover that amount.
The bottom line
The question about when life insurance is worth it for seniors is a subjective one tied to each individual’s personal circumstances and financial health. That said, life insurance for seniors can be worth it if they need a way to pay for end-of-life expenses. It can also simply be used as an inheritance for loved ones after their death or as a way to pay debts that family members and relatives may have otherwise got stuck paying out of their own pocket.