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If you
are a senior shopping for life insurance or a prepaid funeral plan, here
is a brief overview of what you should know, and what you should be
looking for. If you
have NO life insurance you could leave your loved ones with unexpected financial
hardship when you die. Even if you have no dependents, someone has
to pay for your final expenses unless you have already looked after
it, or have enough available cash set aside. While dealing with the
passing of a loved one, having to worry about where the money is going to
come from for the expenses adds a huge burden on family. That is not a
good “last memory” to leave behind. Some people feel that if they
leave property, it can be sold to pay for final expenses, and indeed it
can. But, liquidating property takes time, and when sold to pay debts, is
often sold too quickly, and for less than its market value. WHICH
IS BETTER - INSURANCE, OR A PREPAID FUNERAL PLAN? If you
have the money to pay in full for your funeral, a Prepaid Funeral
Plan is not an entirely bad idea, notwithstanding the fact that there is a
small risk of the money being mishandled. Money funeral homes take in for
this purpose is subject to government regulations meant to protect the
consumer, and as long as the people you are dealing with are honest and
financially stable, the money should be there when you die. However, there
have been some cases where money was mishandled, and it was not there when
needed. The fact that a case like this may lead to criminal charges for
the funeral home owner or others is no consolation to the family who is
informed that the prepaid funeral has to be paid for again.
So, if you choose this option, make sure you are dealing with a reputable
company. This risk does exist and you should understand it. For
many, you may be paying for a service that you would not use for many
years, and unexpected things do happen sometimes. If you do
not pay in full for a prepaid funeral, another, more significant
risk, arises. If you make a purchase on installments, and you die before
you have paid in full, the only money available to pay your expenses is
whatever amount you have paid in. It
could be a number of years before it is paid for, so the risk of dying and
leaving the expense to others will still exist until it is fully paid. On the
other hand, if you are dealing with a major insurance company,
there is virtually no risk of the money not being there when you
die. Virtually no risk is better than a “small risk”. With a proper
life insurance policy, you are covered from the time you sign the
application or the time you are approved depending on the policy. So,
our preference is life insurance over the prepaid funeral plan. WHAT
SHOULD YOU BUY? Here are
some options if you end up later in life without having enough cash assets
to pay your final expenses or you just prefer to leave those assets to
your family. 1.
Seek
regular permanent life insurance.
Many seniors are in good to excellent health. If this is the case for you
- apply for a small Universal Life Policy with Guaranteed Level Premium.
Many companies offer this kind of coverage to people in good health up to
age 80. This will probably provide the best and lowest cost coverage if
you qualify for it. Of course, the older you are, the more life insurance
will cost, but many people are surprised that the coverage is still
available in later years and that the cost may not be prohibitive. 2.
Get a professional opinion. Don’t buy any life insurance
over the telephone or internet unless you speak to a licensed financial
advisor, and you are convinced that he/she has your best interest
in mind. There are so many products offered today designed specifically
for seniors. Don’t buy anything until you understand it. 3.
If you cannot purchase regular life insurance because
of health or other reasons, then consider buying one of the many “limited
questions asked” policies on the market today. Just be careful -
some have a two-year waiting period before the full coverage is in-force.
Always try to find one without that 2-year waiting period first. If you
have no other alternative, then consider the one with the waiting period,
but make sure you read the fine print and understand what you are buying. CAUTION:
Before you apply for any insurance policy, take this into
consideration. If you feel strongly that you are going to be declined
for regular insurance, and you seek professional advise and are told you
will most likely be turned down, you may want to jump directly to the
limited questions asked policies without first applying for the regular
policy. This is sometimes a difficult decision, but the problem is that if
you are officially “declined” for any kind of life insurance,
you might also limit your chance of purchasing the limited questions
type. Many of the limited questions policies ask if you have ever been
declined for life insurance and if you answer ‘yes’, that
disqualifies you. Again, remember, a good financial advisor can help you make the best decision. How
much Coverage do you need? See More.
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