10 Reasons You May Need Life Insurance After 80
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Death of a loved one has always been an elusive matter and it inevitably affects all people from all walks of life, young and old, the sickly and the healthy, the dose is equal in measure. At some point, we start coming to terms with it more so at the age bracket of 80-90 and in such situations the least we could do is make it less financially and emotionally demanding. Don’t get me wrong, the pain cannot be substituted with the most effectual preparation, no one is ever prepared to let go at a moment’s notice. Such is life but, before this gets abysmal, we’ll get straight to it.
The importance of insurance is universal, however anticipating death is not as easy as we’d want it to be even for old folks, consequently, the need for a benchmark on when and why you should get a life insurance is important.
Why After 80?
Life insurance like any other insurance coverage is governed by the main principles of insurance. Basically, the older you are the more expensive the cover will be, which is accounted for.
So, why should you put emphasis on life insurance after 80? Well, the answer is straightforward, life insurance gives your beneficiaries an easier time when dealing with your loss. It does not substitute you, it substitutes what you offered financially.
After death, some expenses will obviously be incurred along with other contingencies. Keep in mind that the older you get the higher the cost of the cover.
Types of Life Insurance
Before we get to the details of why life insurance at 80 is essential, let’s recap on the two main types of life insurance policies, term insurance, and whole life insurance, the most common insurance policies.
Whole life is also referred to as permanent insurance and encompasses several packages such as universal life, the traditional whole life insurance, and variable universal life insurance. There are other supplementary insurance covers which are customized for different situations.
As the name suggests, term insurance covers the assured person for a limited amount of time as stipulated in the policy which in most cases range from one to thirty years. Term insurance is further categorized into decreasing and level term. In level term, the benefits accrued remain the same throughout the policy period while in decreased term insurance, the interest on benefits accrued reduces, usually in 1-year increments.
There are different types of covers, therefore, the reasons vary from one person to the next. Some of the influential reasons seniors at their 80’s get insurance cover to include:
#1. Protecting Your Loved Ones After You Are Gone
One of the main reasons you should follow up on that life insurance cover is to protect your loved ones when you leave. After you die there will still be expenses. Whether, it’s paying your spouse’s medical bills, settling your kid’s college tuition or simply for financial security, the cover can go a long way in making the life after your departure bearable. Think of it as a one-time thing, nobody likes addressing it due to its morbidity except lawyers, but once it’s done it salvages your family from financial burden and emotional charges.
#2. Covering the Burial Expenses
Funerals are expensive even for small services. According to the International Health Organization (IHO), the average burial costs $7000. The amount of money, in the long run, can drain your loved ones financially. Despite the rates varying in different geographical locations, there are some expenses that are universal such as, the hiring of professional services, embalming the body, casket, transportation, printed packages to be used in the burial and many more. The thought can be daunting, all the more reason why you should get a cover that will be channeled to settle these expenses.
#3. Settling Debts
The last thing you want to do is leave your family in a financial crisis that came from your liabilities. This is when fights start and it can lead to family break up. Some debts require the selling of property such as houses to stay solvent. Any outstanding debts from commercial loans to personal loans are fully settled by your cover when you pass away.
#4. Past a Certain Age, You May Not Qualify
Insurance companies run on risks and uncertainties. The higher the probability of a risk occurring the higher the cost of the cover, in some cases if the risk is guaranteed to occur, then the insurance company will refrain from offering a package to that effect.
Depending on the life cover you take, the insurance company gives you back what you accumulated in principals paid per year or month. The money in the pool collected by the insurance company is used to invest in other areas such as leasing and renting, real estate etc.
The requisite to invest will require a ‘healthy’ grace period to invest and gain profit before they can assure you or your loved one. Consequently the lower the risk of death the more likely they will assure you.
#5. To Leave Inheritance
Even if you don’t have any other assets to pass on to your people, you can accumulate some inheritance through life insurance covers. This is a great way to step up your kids and spouse to a better financial future. It’s worth noting, as mentioned earlier despite the principles of insurance being slightly different, they still apply. The cover does not necessarily add value to your previous condition financial condition, it only the serves the purpose of reinstating what you lost financially after your death.
#6. A Good Vindication for Saving
Some insurance companies offer packages where you can assure your life for a period of time, in cases where the risk doesn’t occur, you receive a percentage of your accumulated money as a dividend. You might be wondering why you should assure your life just to save money while others easily do it through by using bank accounts.
Well, think of it this way, you get to kill two birds with one stone. When the risk occurs you will have financially safeguarded your dependents on the other hand, if the risk does not occur then you can use the dividend to improve your living standards since savings is one of the elements used in the measurement of good living standards.
#7. Your Business is Also Safeguarded
Apart from safeguarding the future of your loved ones, you also safeguard your business. Ensuring a business is a necessity for any business there are separate covers that ensure your business such as fire, disaster, theft and many more, all these will come in handy when these risks occur.
However, very few insurance companies offer packages that safeguard your business under such events or according to the National Association of Insurance Commissioners, most of the people ignore it. That’s where life assurance saves the situation. Through an augmented package you can insure your business or directly use the insurance cover to protect both entities, you’re loved ones and your business.
#8. To Buy a Business Partners Shares
Currently, most of us are either directly or indirectly involved in some kind of business partnership. When of the partner dies, it is important to have a mutual agreement on how the business will move forward. There are many alternatives you can opt for, one of them being life insurance. Life insurance under such circumstances can be used to buy off one of the partners.
#9. Estate Taxes
Estate taxes is yet another puzzle that needs to be solved while you still have the chance. After you are gone the hefty estate taxes start accumulating and before you know it the government starts leasing your property to pay off the taxes. You can use the cover to hedge your people against such events.
You have a complete discussion on funeral expenses taxes, read it.
#10. For Peace of Mind
Death is unavoidable, the only predictable variable is that life will go on without you, bills will have to be paid so securing your family’s financial future is the least you could do. When your time comes you will be at ease knowing you have left your family in a comfortable financial position. Small covers can go a long way in helping your loved ones through difficult times.
Is life insurance designed for people with families to support? Ultimately, if you don’t have anyone depending on your income, your beneficiaries, for the most part. However, it can still be used in other situations such as settling should consider taking another route in respect to your finances after you pass away.
Nevertheless, life insurance supports debts and taxes. Remember a financial advisor can help you explore the different options you have in terms of the type of insurance cover to take and the factors that make you viable for one such as elderly parents, partners in a business ownership, childless couples or homeowners with mortgages and other debts.
All in all, life insurance is an essential tool for personal financing and requires some attention from every household.