Should You Buy Senior Life?
Is senior citizen life insurance a good deal for your family. You may have some questions because you saw an advertisement on TV or got a post card in the mail. Let us look at how these senior policies work so you can decide if they woud help your family.
Families may need cash when a loved one passes away. Funerals are expensive. Families also have other things to pay for at this time. Loved ones may need to take time off from their jobs, travel, and feed mourners. This can be a very stressful time for everybody. Nobody wants to add money problems to the stress.
However, older people will cost more to cover than younger people. While you can compare senior life insurance rates to find low cost alternatives, you have to decide if this is a good financial decision for your family.
Consider an example. Keep in mind that the numbers I use are from one example policy, and you need to compare quotes to find the exact rates and policies for yourself.
A typical premium for a $10,000 whole life policy for a 70 year old would be about $75 a month. In our example, the policy will be paid up at age 95. After 95, the policy is considered paid up.
But if the 70 year old does survive until age 95, that means they would have made 25 years of premium payments. This means that they would have spent nine hundred dollars a year for the insurance. This would add up to $22,500 over twenty-five years!
Paying over twenty thousand dollars for a ten thousand dollar policy does not appear to make sense. If the insured person would have takent that same $75 a month, and saved it at a low 2 percent interest rate, they would have almost $30,000 after 25 years.
Of course, that is one example of how life insurance companies profit. They do have to pay out death benefits when people pass away, but they also have the opportunity to invest the premiums while their clients are still alive!
If the covered individual only lives for a year or two, he or she would only have had to pay about one or two thousand dollars for that ten thousand dollars that the family will get. In this case, the insurer would lose money and the family would come out ahead. So insurance companies do take a risk.
Buying insurance is all about mitigating risk. There may be some alternatives that would make more sense at this point though.
There are some advantages to purchasing senior life insurance. If you cannot save money well, you will never have the opportunity to grow a savings account. Some people are better about paying bills, like premium bills, than they are about saving money. It may just make more sense to buy a policy.
The example that I used was just one common policy. If you shop around, you may be able to find senior life policies that are cheaper with better policy terms. For example, you may find a policy that will be paid up after 10 years, instead of being paid up at age 95. Before you decide to buy a senior life policy, it is a good idea to shop around!
About the Author
You should shop and compare before you buy a senior life insurance policy for yourself or a family member!
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