Life insurance mistakes seniors should avoid
Life insurance can be advantageous for a wide swath of adults. Whether you're young and just starting your career or older with children and a spouse financially dependent on you, life insurance is generally worth having. It's also worthwhile for many business owners and those with existing debt (like mortgages). One group that's often left out of the life insurance discussion, however, is seniors.
For older adults, life insurance is often considered not worth it when viewed through a cost-benefit analysis. But that's a misconception. Life insurance can provide valuable and cost-effective protection, even for seniors who may have thought otherwise.
That being said, to get the most out of a prospective life insurance plan, seniors should familiarize themselves with the nuances of this type of insurance and do their best to avoid any costly mistakes.
If you're in the market for life insurance, start by getting a free price estimate now.
Life insurance mistakes seniors should avoid
Here are three life insurance mistakes seniors should be careful to avoid.
Not getting enough coverage
If you're in the market for life insurance, you probably already know what you need the policy to cover. Maybe you want it to help cover end-of-life expenses like a wake or funeral after you die. Or maybe you want it to help pay off debt or a mortgage in your absence. Whatever your goal, make sure you have the right coverage amount to adequately meet your needs. You don't want to get stuck with a monthly bill for a policy that can't really help you.
However, you don't want to over-insure yourself, either. Life insurance policy amounts range from tens of thousands of dollars to more than $1 million. You can easily wind up paying for more than you need. Narrow down the exact amount of coverage that will help you meet your goals and then only apply (and pay) for that amount.
Get a free life insurance quote online now to see what you're eligible for.
Buying a whole policy
If your aim is to get life insurance coverage without paying top dollar, forgo a whole life insurance policy and instead pursue a term one.
Whole life insurance can be attractive due to its cash reserves and ability to be used while you're alive. But these options come with an extra cost, which may be burdensome for seniors relying on retirement savings and Social Security.
Term life insurance isn't as flashy. It comes in set time frames and expires when the term runs out, without any cash to play with. But it will protect you and help you accomplish your goals without the hefty price tag.
So, unless you're fully committed to what a whole life insurance policy can offer, skip it, save the money and get a term policy instead.
Improperly listing beneficiaries
The whole point of a term life insurance policy is to leave money for loved ones after your death. To properly do this, you'll want to ensure you accurately list your beneficiaries on the policy in question. Make sure to triple-check the spelling of names, contact information, Social Security numbers and other identifying information so your beneficiaries can easily submit a claim after you die.
Also, be sure to list more than one beneficiary (it's generally advisable to have a primary and two contingent beneficiaries). And be wary of listing minors. Should you die when your beneficiaries aren't of legal age, they may encounter a difficult legal process to obtain the funds. Restrictions on how much money minors can access via a life insurance policy vary from state to state, so the transfer won't be as easy as it may be with an adult.
The bottom line
Despite conventional wisdom, life insurance can be beneficial for seniors, too. To get the most out of a policy, older adults should do their research and familiarize themselves with types of policies. They should also do their best to avoid some common mistakes. This includes not getting enough coverage (or paying for too much coverage). Seniors should also strongly consider a term life insurance policy instead of a whole one. And, perhaps most importantly, they should carefully (and accurately) list eligible individuals as their beneficiaries.
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