Final Expense Insurance
Finding Life Insurance for our Senior loved ones in those later years isn’t as difficult as it may seem.
What’s the best way to plan for Life Insurance in your senior years? Well, there is no one set answer because each situation is different. There are health concerns that will make insurance unaffordable in many situations. There are financial situations that could mean the transferring of assets. There could be a tax situation, which would make a completely different set of circumstances a better option. I will try to cover the above situations again because each circumstance would make that situation unique, and I don’t believe there is a one-size-fits-all. However, there is a common situation where the senior has had insurance to protect his family, and now they no longer need the coverage. Again, I will review the information to help you make a sound decision in the insured’s and his family’s best interest.
(http://www.awareinsurance.com/blog/life-insurance-checkup-an-important-tool-for-financial-health)
Let’s take the latter first because that is the simplest to understand. Let’s say you’ve had a term policy for 30 years, the kids are all adults, and your policy is about to expire. In this case, I suggest you contact a Final Expense Insurance Agent who can properly guide you on how to proceed. A suggestion would be to carry insurance for the expenses after the death of the insured, such as funeral expenses, taxes, debts of the insured, etc. The creditors, including the IRS, may come after the deceased’s assets to pay for the debts. This will spare the family the burden and stress of having to take care of this because the family does not plan for it. It’s a difficult thing to discuss, but insurance is sometimes needed to protect a lifetime’s worth of hard work and to make sure that the family doesn’t have to go through unnecessary stress during this time period. I would not advise continuing with that policy, as the price will usually rise substantially.
Final Expense Insurance is a policy that covers the expenses of the insured. It’s not another situation where the insured had Whole Life insurance and accumulated an amount of cash value. This is a different situation than above because of the amount of money accumulated in the policy. It is important for the policy owner and the family to take the value out of the policy before the insurance starts to eat it up. What will happen is that the insurance cost for seniors will be higher; this will cause the cash value of a policy to be used for coverage instead of growing. Again, in this situation, I suggest you consult an experienced Life Insurance Agent, an Accountant, or possibly a Tax Attorney due to the tax consequences. Life Insurance accumulates Tax-Free. However, there is the possibility of tax consequences because the funds increase the income of the individual, which then may become taxable when withdrawn. I would recommend that the money be withdrawn from the policy, and then the policy be replaced by a new policy to cover expenses. Again, this is a tricky situation, so I suggest you consult a professional because there can be a loss of income if handled properly. The money should be taken out when it is at the maximum increase. I will touch on getting a policy for seniors in the following chapter. It’s called a Final Expense Insurance policy, and we specialize in this type of policy.
Designed to take care of the loved ones that are left behind, these policies can be used to pay off the insured’s bills, which can help the remaining relatives of the insured. However, these policies have different objectives. The policy will cover such expenses as taxes, credit card bills, and personal loans, and one of the main expenses is the burial of the deceased. These policies are expensive because senior citizens usually purchase them with a higher risk than those looking for life insurance. There are policies where acceptance is guaranteed. Some policies actually carry a small amount of cash value, as they are whole-life policies. There are quite a few possibilities, so again, consult a professional. This policy is an especially good choice for senior citizens as it will take care of the expenses they leave behind. It is a great choice to replace a whole-life policy where the cash value has been withdrawn.
So I hope that I have answered your questions. I would be happy to speak with any of you regarding which direction you would like to take. I have been sworn to do what is best for the client and not to take advantage of the situation. I will not replace a policy for you until I am sure that you understand what the consequences of that choice are. I would also gladly speak with the children of a senior citizen. You can reach me at Bill@awareinsurance.com
