October 6, 2016
Generally people buy life insurance to cover the years when their families depend on them for financial support. For this reason, young adults with families are traditionally likely to consider buying life insurance. But sometimes, certain types of life insurance might make sense for seniors.
Generally, most older adults can purchase life insurance, and you may wish to consider it. A policy could help your loved ones deal with estate or inheritance taxes. It can also help you provide a monetary legacy to your children or grandchildren. These are just some of the reasons you might consider life insurance in midlife and later.
Types of life insurance
Among the various kinds of life insurance are term and permanent policies. The details of their policies may vary by insurance company and plan.
- Term insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other significant benefit provisions, and the death benefit stays the same throughout the duration of the policy (referred to as “level” term benefit). You generally pay a monthly (or annual) premium for term coverage, and this premium has the potential to increase with age.
- Permanent or whole life insurance policies pay a death benefit whenever you die, if the policy remains in force. You also generally pay a monthly (or annual) premium for permanent life insurance, but some plans may allow you to stop paying premiums after a certain number of years. The premiums for permanent life insurance policies are usually higher than for term policies because part of your premium is used by the insurance company to make investments to build cash value. Value is built up each year that you keep the policy and is typically tax-deferred. This means that you can usually borrow against the cash accumulation without being taxed, although you may need to pay interest. Returns are not guaranteed with a permanent life insurance, and term policies may be more appropriate for some life situations, so you should weigh your life insurance options carefully to find one that works best for you.
Medicare and life insurance
Medicare isn’t life insurance, and neither Original Medicare, nor Medicare plans offered by private Medicare-approved insurance companies, provide life insurance coverage. Licensed insurance agents are generally prohibited from discussing with beneficiaries non-health coverage products, such as annuities or life insurance, at the same meeting where they discuss Medicare Advantage plans and Part D Prescription Drug Plans offered by Medicare-approved insurers.
Furthermore, Medicare doesn’t generally cover long-term nursing home stays. Medicare may help pay for a short stay in a skilled nursing facility, for hospice care, or for limited home health care if you meet the following conditions:
- You have had a recent prior Medicare-approved hospital stay of at least three days.
- You are admitted to a Medicare-certified nursing facility within 30 days of your prior hospital stay.
- Your Medicare-assigned doctor prescribes certain care for you, such as skilled nursing services, physical therapy, or other types of therapy.
If you meet all these conditions, Medicare will generally pay for some of your costs for up to 100 days.
You may be able to use your life insurance policy to help pay for long-term nursing care through several options, which may include: a combination products life insurance policy that includes long-term nursing care; a life or viatical settlement option, or an accelerated death benefit. If you have a life insurance policy, you may want to verify if any of these options are available if needed.
To start exploring life insurance policies in the area where you live, click here.