Benefits of life insurance

When it comes to getting a quote for life insurance, many seniors may wonder if it’s an important investment later in life. Life insurance may not be very fun to shop for, but it can end up providing financial benefits for you and your family. And while it might be something that no one really wants to buy, most people recognize the importance of life insurance. According to the 2013 Insurance Barometer Study by LIMRA, 85 percent of respondents agreed that most people need life insurance. However, the disconnect appears when people actually purchase a life insurance policy, as only 62 percent of respondents in the survey said they have it.

Coverage benefits
Most people between the ages of 25 and 35 invest in life insurance. When people first get married and start to have children, the necessity for a safety net is the big driver for purchasing a life insurance policy. Once you reach later stages in life, the need for life insurance changes slightly as the need for protection is no longer there. However, life insurance for seniors can still provide a wealth of benefits for your family in terms of finances and
additional coverage. Start thinking of life insurance as an important part of financial planning for seniors.

Life insurance policies can even be seen as investments, as it is sometimes possible to take cash payments while the policyholder is still living. In contrast to other types of policies, such as burial insurance, life insurance could provide policyholders with more flexibility and freedom. The biggest benefit of life insurance is knowing that you will be able to provide for your family if the unexpected were to occur. Knowing that your family will have financial stability can give you peace of mind. Beyond protection, a life insurance policy could end up paying a mortgage or school tuition fees.

Types of life insurance
Term life insurance is a type of insurance that provides a fixed monthly payment for a set amount of time such as 10 or 20 years. A term policy allows you to set the monthly payment and length of the policy, but it affects the lump sum in the end.

Permanent life insurance has a higher monthly premium, and part of that monthly payment goes toward the value of the insurance policy. It is like putting money in a savings account as part of your policy.

A policy that has a decreasing premium over time is called a mortgage term policy. This policy may be less expensive than term life insurance, as the monthly payment depreciates over time.

Investment benefits
For nearly every life insurance policy, it is possible to cash out after the policy has ended. For permanent life insurance, there is less flexibility, and cashing out could result in little or no payment. When deciding on a life insurance policy, think about senior retirement and when you might want to cash in.

For some term policies, interest can be earned for the cash values of permanent life insurance. Interest rates for these policies are often higher than bank savings. Letting this investment grow and cashing in later can provide you and your family with a big boost of income. Cashing out can also allow you to put your lump payment into an annuity fund, tax free.

Pete Blasi