Prepaid Life Insurance For Seniors [Be Ready For Funeral Expenses]

If you have just heard of prepaid life insurance and want to learn all there is, you’re in the right place.

As an expert in the field with deep knowledge of how it works, it’s only fair that I let you know what you’re getting into- especially if you’re considering it as a senior.

I’ve given a detailed explanation of how prepaid life insurance for seniors works.

You’ll learn what it is and how it works. You’ll also get a genuine response about whether you should opt for it or ditch it for another life insurance policy.

Let’s dig in.

What Is Prepaid Life Insurance?

The first thing you want to know about prepaid life insurance is that it is not a fixed type of insurance like term life insurance or whole life insurance. This type of insurance applies to almost every life insurance, from term life to whole life insurance.

Now, it differs from traditional insurance with a few differences.

For instance, traditional insurance doesn’t require you to make payments in advance to access the benefits tied to life insurance services. You’ll probably have to pay for your insurance coverage as you go.

However, the case is different with prepaid life insurance. The insured or policyholder would have to pay the premiums upfront before enjoying the services.

If you want to get it, you’ll have to pay the total amount upfront. Prepaid life insurance follows the standard payment method in other fields.

For instance, you’d have to pay in advance, perhaps a year magazine subscription upfront, to access a magazine. Then the manufacturer would send you a copy of the magazine monthly.

Prepaid life insurance works similarly. So, what is prepaid life insurance? It’s any life insurance policy that requires you to pay your premiums upfront before access to enjoying its benefits is activated.

Generally, life insurance is to help seniors prepare their funeral expenses ahead of when they’ll die. You’ll pay monthly in some life insurance policies as you enjoy the insurance benefits.

But of course, it’s different for prepaid life insurance. It is a “payment before service” type of policy. It works within the confines of catering to funeral expenses before the insured dies.

The policy aims to ease the financial burden of planning your funeral off your family’s shoulders.

In essence, while your family grieves that they just lost you, they won’t have to worry about gathering money to bury you.

How Does Prepaid Insurance Work?

It works straightforwardly. As a senior looking to opt for a prepaid life insurance plan, you must make the full premium payment. That’s the only way you’ll activate the policy.

Usually, it lasts for a year, which you can renew. Nevertheless, there are options for 3 to 5 years or more. The insurance coverage depends on the insured and the insurer.

Of course, the insurance company decides when to make the prepayment. The best part is that you won’t need to bother about features like inflation affecting the premium you pay once you make the payment.

Does prepaid insurance last a lifetime? Not really. In fact, it all depends on the type of prepaid insurance you signed up for. You see, prepaid insurance is more like term life insurance. It lasts for some years.

For instance, you can pay for a prepaid insurance plan that’ll cover you for 5-10 years. The policy will expire after the fifth or tenth year if you do not die. Then, you’ll have to renew the plan if you still want it.

You might have to pay more to renew the prepaid insurance plan depending on the company. But suppose you die within the stipulated time.

In that case, the insurance company has no choice but to give the death benefit from the plan to the selected beneficiary.

If you decide that you no longer want to continue with the prepaid plan after making your prepayment, you can request a refund.

You can get a refund as long as you ask while the plan is active. Nevertheless, the refund is not an easy process.

Different Types Of Prepaid Funeral Plans

The prepaid funeral plan is a type of prepaid insurance plan. You might want to tighten your buckle for this one, as there’s a lot to gain. You’ll have to pay for this upfront.

The only difference between prepaid funeral plans and prepaid life insurance plans is where you get the insurance. For prepaid plans, you have to secure the plan from insurance companies.

But with prepaid funeral plans, you make arrangements with a funeral home. The prepaid funeral plan is a type of prepaid life insurance.

The goal of prepaid funeral plans goes beyond merely taking the financial burden off your family members. It would also help you execute your funeral plans and wishes based on your preference.

You allow your family to only spend energy grieving you while letting the funeral home execute your burial.

The amount you’ll pay on prepaid funeral plans as a senior depends on certain factors.

Your preference, age, etc., determine the amount you’ll pay for starters. Nevertheless, prepaid funeral plans cost somewhere between $2,000- $10,000.

If you don’t want any burial services to be held for you, you can subscribe to the prepaid funeral plan that only caters to direct cremation with no funeral service.

This plan would cost you anywhere between $2,000- $4,000. If you want a burial with a funeral service, that can be arranged. But you’ll have to pay about $8,000- $10,000.

Single Premium Payment

If you’ve heard of prepaid life insurance for seniors, you’d also have heard of single premium payment insurance. Frankly speaking, both are similar.

With a Single-premium payment, you’ll get a permanent death benefit that never goes away until you die.

However, you’ll have to pay a one-time huge lump sum of money to purchase the insurance plan. Of course, this plan is immune to inflation. More so, the headline of this policy is that it never precisely expires.

You rest assured that when you die, there’s financial assistance in insurance death benefit to cover your funeral and burial expenses.

You should note that the amount of money your beneficiary would get when they die depends solely on the amount paid when purchasing the policy.

Other factors that determine the amount of death benefit your family would get are your health and age.

However, seniors with good health would receive higher death benefits than those in bad health.

If you and another senior pay the same amount to get a Single-premium payment plan, you both won’t get the same death benefit. The healthier one between the two of you would get more money.

There are different types of single-premium insurance plans. There’s the single-premium variable life insurance policy, whole life, and universal life.

The best thing about each single-premium insurance type is that they have their uniqueness.

Monthly Installment

You might have heard that some insurance companies offer monthly installments.

Insurance companies that provide prepaid life insurance sometimes offer monthly installments to help people pay their premiums.

Usually, you’ll be required to split the entire sum of money into 3, 5, and 10 years. But you’re not allowed to miss your payment when it’s due. However, this option is not open to everyone.

For instance, not every senior would be lucky to access the monthly installment payment.

If you’re a senior between the ages of 60 and 85, you might pay your prepaid plan in installments. But once you’re older than 86, the monthly installments option is not available to you.

Pros Of Prepaid Life insurance

They Are Renewable

While prepaid life insurance is generally like term life insurance that expires, you can renew it with the same terms and conditions.

They Can Last For Long

Prepaid life insurance might not last you for a lifetime, but as a senior, you can get a good plan that’ll last you for an extended period.

For instance, a prepaid plan could last you for 10 years.

Depending on your age, you might not need to renew the policy as there’s the possibility that you might die within the insurance coverage period.

Impressive Death Benefit

If you’re a senior and you’re healthy, your beneficiary’s death benefit would be enough to cover the entirety of your funeral and burial expenses.

Eases Financial Burden

Opting for prepaid life insurance takes the financial burden of your burial and funeral off your family’s shoulders.

Single-Premium Payment

If you opt for the right prepaid plan, like a single-premium payment plan, you’ll gain access to a guaranteed death benefit till you die.

In essence, it won’t expire.

Living Benefits

You’ll have access to living benefits if you nail an excellent single-premium payment life insurance.

For instance, you’ll gain access to the death benefit to cater to long-term care expenses. Of course, the access is mostly tax-free.

The goal is to save your assets from getting devoured by the cost of long-term care.

Prepaid Funeral Plans

Seniors who opt for the prepaid funeral plan aspect of prepaid life insurance would have every burial detail sorted out by a funeral director and funeral home.

Refundable

You can choose to cancel the prepaid life insurance during the active coverage period. You’ll get a refund, but it won’t be straightforward.

Available For All

You can buy a prepaid life insurance plan regardless of your ailment.

Generally, opting for the right prepaid life insurance is all you need to get your funeral sorted.

Cons Of Prepaid Life Insurance

Payment

As a senior, the only option on a prepaid insurance plan is to pay once. You can’t opt for a monthly installment option unless you’re 89 years and below.

However, for people at a later age over 90, this is the best option one can get.

Nevertheless, some companies that offer prepaid life insurance plans might not grant seniors above 60 the installment option.

3 Single Payment Life Insurance Companies For Seniors

There is no rocket science attached to it when shopping for prepaid life insurance. All you need to do is seek out the best insurance company with a fantastic burial insurance policy, and that’s it.

The reason is that most burial insurance companies have prepaid life insurance plans, even though they don’t highlight it on their website. It’s an option you can discuss with their agents.

Here are some of the finest insurance companies with superb burial insurance and prepaid insurance policy.

Let’s dig in.

#1. Aetna Life Insurance

The first thing you should know about this burial insurance company is that it owns the American Continental Insurance Company.

Their burial insurance policies are also offered to seniors and their clients through the American Continental Insurance Company.

They have an impressively solid financial standing that makes them capable of keeping their end of the bargain in any signed insurance policy.

It shows through their A-rated AM best score. You probably didn’t know much about insurance companies if you’re just hearing about them.

The reason is that Aetna has been in the insurance games since 1853. However, they functioned more in the health insurance field. Aside from that, they also offer some of the best burial insurance coverage to seniors.

If you’re an 89-year-old senior, you can get new life insurance policies from Aetna. The best part about Aetna is that their coverage never expires. There’s also flexibility with payments.

The best part is that they are second to none when it comes to their rates. They offer the best rates for their life and burial insurance policies.

More so, seniors won’t have to go through waiting periods that could potentially complicate things.

Aetna won’t subject you to waiting periods regardless of your health condition.

Instead, they’ll take you in and shower you with living benefits once your coverage plan is active. They’ll also give you a guaranteed death benefit.

Pros

• They offer no waiting periods.
• Seniors over 89 years old can still apply for new life insurance coverage
• Coverage never expires.
• Rates are competitive.
• You don’t need to take a medical exam to be considered for burial insurance.
• No MIB check

Cons

• Offers no rider option.

#2. Mutual Of Omaha

This company falls on the list of insurance companies that pats seniors on the back and says, “we hear you, here’s something for you.”

Although not on a large scale, Mutual of Omaha offers fantastic life insurance plans to seniors.

When they started the company in 1909, it was a mutual insurance company that catered to health and accidents.

Over the years, they’ve spread its tentacles to include an impressive variety of insurance products for diverse age groups.

Seniors will benefit from their burial insurance and prepaid insurance plans. It’s thanks to their underwriting.

Purchasing any burial insurance policy from them would cost you $2,000- $40,000. One of the benefits you‘ll gain from their life insurance policy is that their policies do not expire.

The value of their coverage doesn’t diminish with time, either. One of the highlights of this company is that they have a remarkable Return of Premium term insurance policy.

Anyone signed to this policy gets a premium refund if they outlive it. But of course, this policy is expensive compared to the regular insurance policies at Mutual of Omaha.

Another impressive feature is that seniors won’t have to take a medical exam for some policies.

You can access the policy as stated in the favorable underwriting as long as you fit the bill as stated in the favorable underwriting.

Pros

• You can modify policies with the aid of fantastic riders.
• Return of premium insurance.
• No- exam is needed to qualify for some policies.
• Policies do not expire.
• Premiums are mostly fixed.
• It helps build cash value over time.

Cons

• There’s no online application for term life insurance policies.

#3. Transamerica

The enticing feature of Transamerica life insurance is its coverage versatility. They offer several policies with great riders to modify these policies to your taste. So far, their financial standing rating is impressive.

They have an A rating on AM best, an A1 on Moody’s rating, and an AA- S&P rating. These prove that Transamerica doesn’t have money issues, and they’ll uphold the end of their bargain as long as you uphold yours.

When it comes to burial insurance, specifically final expense, they offer plans that seniors over 80 can benefit from.

Although your health condition won’t hinder you from getting any insurance policy from Transamerica, it would determine the policy that’s best suited for your need.

Furthermore, the company offers first-day coverage with 100% coverage. But the immediate coverage is one of the two plans that this insurance company offers.

The second type is the easy solution that comes with a 2-year waiting period. While the immediate solution is available for seniors over 60 to 85 years, the easy solution is only available for seniors from 60 to 80 years.

Both options have riders. The best part is that premiums and death benefits are fixed.

Pros

• Their products are versatile
• Underwriting is high-risk
• Coverage doesn’t expire
• Premiums are fixed
• Amazing riders
• You won’t need to take an exam to access this policy and its value.

Cons

• Their customer satisfaction rating is below average.

Alternatives To Prepaid Life Insurance

If you feel like prepaid life insurance is too complex or unfavorable to you, you can check out some alternatives.

Some of the other options to pre-fund your burial that you can try include:

Final Expense Insurance

Seniors of any age can qualify for this insurance. It avails them just enough death benefit amount to cater to some of the financial aspects of your burial.

Funeral Trust

You’ll need an attorney to nail this. The attorney would help you set up a funeral trust that’ll house the money dedicated to your funeral expenses.

Other options are:

• Payable on-demand account
• Joint bank account, etc.

It is noteworthy that these alternatives only help you pre-fund your funeral. In essence, it only caters to the financial part of your burial.

They do little to nothing in planning how your funeral would go and how the money would be allocated.

FAQs

Can You Buy A Life Insurance Policy With One Payment?

Yes, you can. This type of life insurance policy that’s usually purchased in one payment is referred to as a single premium payment.

It’s a type of prepaid life insurance that seniors can benefit from, as they’ll receive a guaranteed death benefit when they die.

It is a reliable type of prepaid life insurance plan.

Can You Pay A Lump Sum For Life Insurance?

Yes, you can. In this context, you may have the option of paying in installments. However, you choose to pay it all at once. This context is common in insurance policies.

Opt for it if you can pay for your life insurance plan at once. You don’t need to subscribe to the installment payment plan if the lump sum payment is an option you can afford.

What Happens If Someone Dies Shortly After Getting Life Insurance?

In such an instance, the insurance company has to pay the death benefit to the beneficiaries named by the policyholder.

It could be a funeral home or a relative. Insurance companies have to pay the death benefit regardless of how short the policyholder held the policy.

Who Offers A Prepaid Plan?

Generally, insurance companies with burial insurance policies offer a prepaid plan. They might not highlight the plan on their website.

So, reach out to the insurance company’s agents to clarify if they have a prepaid life insurance plan for you as a senior.

Final Words

Scouting insurance companies for favorable prepaid life insurance for seniors requires much work. You have to scan through the options patiently.

Have unending conversations with the agents of the burial insurance company you’d like to buy the plan from.

But with our list, you already have a headstart. Good luck finding the right prepaid insurance for you.