Friday, October 26, 2018

Who says you’re too old to buy Life Insurance?

The older you are, the costlier life insurance becomes. There is a reason for this. Life insurance companies need to limit their risks: the chances of paying out for a life insurance policy bought by a 65-year-old is greater than one taken out by a 35-year-old. The cost is a major factor that seniors need to consider when deciding on buying a life insurance policy, but it is not the only one.

Do seniors need life insurance?

You have had life insurance for most of your adult life. You bought the coverage so that those who depended on you financially would not suffer if you should die. Now you’re into your retirement years, your children are settled and independent and you have paid off your mortgage. In effect, you have no financial liabilities to worry about.

In such circumstances, do you need life insurance? As in many aspects of life, there is no clear-cut answer for this. What is clear is that deciding to forego life insurance is a major decision, at any age, and you need to consider carefully the ramifications before making a decision.

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Reasons for not having life insurance

These are rather simple:
  • No one is financially dependent on you.
  • Age and possibly health issues have made the premiums too high.
  • You have no debts that your family will be burdened with in the eventuality of your death.
  • You have adequate savings to meet your foreseeable needs.
  • You have all the other insurance coverage you still need like auto, homeowner’s, long-term care and so on.
  • The estate you leave behind will give your family the financial support they may need.
  • The cost of the policy is totally beyond your means.
If all these conditions apply to you, then you may not need life insurance.

Reasons for having life insurance

These are not so simple:
  • Perhaps, not all the reasons given above (for not having life insurance) apply to you. You may need life insurance.
  • You want to leave a legacy that will continue after you are gone. Life insurance is a great way to ensure this. The legacy may not be for your family, it could be for a cause you care deeply about.
  • If you already have a permanent life insurance policy (as opposed to term insurance, which is for a fixed period), cash value will have built up and continuing with the policy makes sense.
  • Paying the premiums does not impose any stress on your finances.
  • Life insurance will give your family money, which they do not need, but will help improve the quality of their lives.

Making the right decision

Life insurance is an area you need to be sure about before you take any decision. You should be able to weigh the pros and cons in a balanced and unbiased manner. This is not easy, because of the financial, practical and emotional issues involved. An expert insurance professional is the right person to help you make the right life insurance decision.

5 Insurance Pitfalls you must avoid

The concept of insurance is simple: you pay a small regular premium; should the situations you are insured against arise, the payout from the policy will give you the finances you need to recover. However, there is a big difference between understanding a concept and putting it into practice the right way.

The terms and conditions of an insurance policy are indeed complex. There is every possibility of making mistakes in arriving at the amount of coverage you require. Consequently, you might get the wrong policy and you are left without the financial resources you need, when you require them the most. Here are listed for your benefit some of the most common mistakes that people make in matters of insurance.

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Having no coverage

This is by no means confined to a small section of the population. If you don’t have coverage, you don’t have protection. The problem is there are so many things you need to protect yourself against. If you own a car, you need auto insurance; but you do not know the type of policy that is right for you.

If you don’t own property, you may not need homeowner’s coverage; but you do need renter’s insurance for where you live. Health insurance is yet another highly complicated field. No matter how healthy you are, you could need it tomorrow, anytime. Should you have disability coverage too in cases where you are seriously injured?

Having too little coverage

Insurance costs money and the larger the policy, the more it costs. The cost of multiple policies together could be disconcerting. A seemingly simple solution would be to reduce the value of the policies; or you may cut back on the types of coverage so that what you pay for insurance fits comfortably into your budget.
That’s fine as long as your life is smooth, and you have no problems. However, what if you need to file a claim and the amount you get is not enough to provide you the money you need to recover? The few dollars saved every month by cutting back on insurance will not save you from the eventuality that has become real.

Having too much coverage

Fear of the worst-case scenarios often drives people to overinsure themselves. This may appear to be a good thing: who will complain about an excessively large payout? However, the effect of paying large premiums for coverage that you don’t really need can have a negative impact on your everyday happiness and comfort.

Having the wrong coverage

It’s easy to get caught up in the idea of protecting yourself and your family from everything you possibly can. Nevertheless, do you really need life insurance, if you have no dependents? Do you need flood insurance, if you live in an arid region with very little rain? The answers to such questions are not always clear-cut. You need to think carefully about various possibilities and options.

Failing to update coverage

Life and circumstances keep constantly changing. A policy that was right a few years ago, may not match your needs today. Not reviewing your coverage regularly to ensure the kind of protection you require could leave you in serious trouble, should things go wrong.

Get professional advice

The right way to avoid insurance pitfalls is to consult an experienced insurance broker, who has the right expertise to help you get the coverage you need at an affordable cost.