When do senior citizens not need life insurance?

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1 From: Tony Steuer Subject: When do senior citizens not need life insurance? InsuranceQuotes.com Date: March 5, :41:45 AM PST To: Tony Steuer When do senior citizens not need life insurance? Aaron Crowe For retirees who no longer work, having life insurance that was meant to replace their income if they died can be a waste of money. If they don t have a salary to replace, the reasoning goes, why keep hanging on to your life insurance? Life insurance is very attractive emotionally, says Tony Steuer, a life insurance author and consultant in Alameda, Calif. Estate planning seminars geared toward selling insurance play on those emotions, even when a senior with a good retirement plan may not need life insurance, he says. However, there are situations when seniors should have life insurance, experts say. One of the top reasons: Life insurance death benefits generally are tax-free, while payouts from retirement plans are taxable. People start looking at the tax benefits, and that s where the insurance companies are pushing, Steuer says. Here are six instances when seniors most likely

2 do not need life insurance. 1. The funeral is covered. If you re worried about burdening your spouse or family members with this cost and you already have enough money to pay for it, life insurance isn t needed. 2. You ve got $100,000 set aside. Other than a funeral, other costs pile up after someone has died, such as medical bills and taxes. Diana Scheel, a financial adviser with Sapient Financial Group in San Antonio, recommends that her elderly clients squirrel away $50,000 to $100,000 for such expenses so they won t need life insurance. Having assets such as a retirement fund, stock portfolio or hefty savings account can make a life insurance policy unnecessary. A life insurance policy can be partially cashed out while retaining some of the death benefits. 3. The kids are gone. If your children have moved out of the house and you don t have to support them anymore, you don t need to pay life insurance premiums, says Kevin Lynch, a professor of insurance at The American College in Pennsylvania. Consider getting rid of the coverage if supporting your kids is no longer a priority, he says. You can find better uses for that money, such as covering daily expenses or saving for health care. 4. You live alone or are very old. Not having heirs to worry about makes life insurance easy to forget. The same goes if you re single or divorced, insurance attorney Frank Darras says. Darras cites the case of his 103-year-old neighbor, whose wife died in May He s outlived everybody, Darras says. If he had life insurance, it s a great time to sell it. 5. The cash value and death benefit of a policy are almost equal. Whole life insurance policies which remain in effect for a policyholder s whole life and require premium payments each year accumulate a cash value over time. If the amount of the cash value and the death benefit are almost equal, it s smart to cash out the policy

3 and take the money now, says Jean Dorrell, a financial adviser who founded Senior Financial Security in Florida. Doing that won t leave your heirs with a death benefit, though. Borrowing against the cash value of a life insurance policy is a good way to avoid taxes while obtaining some money now, Dorrell says. The policyholder s heirs won t have to pay the loan back or pay interest, she says, because the amount of the loan will be subtracted from any death benefits. 6. You have long-term care insurance. If you re planning to tap your life insurance to pay for your care in your golden years, that may be the wrong approach. The problem is you re paying for life insurance costs when what you really need is long-term care insurance, Steuer says. Long-term care insurance goes beyond health insurance in paying for assistance with basic daily activities, such as dressing, bathing and cooking. Q: Why should I get long-term care insurance? What are the benefits for me and my family? A: Long-term care insurance helps protect you, your family and your property from the potential of catastrophic medical costs. You have worked long and hard for your assets and independent lifestyle. Long-term care insurance allows you to have peace of mind, knowing you can relieve the potential burden of your care from your loved ones, and can choose the care that will best suit your needs. Before getting long-term care insurance, it is best to ask: Am I going to need long-term care insurance? What are the risks involved to me and my family if I don t obtain a policy? Am I at risk of needing assistance with daily activities at some point in the future? Is it possible that I ll need to go into an institutional setting, such as a rehabilitation, assisted living or nursing facility? Can I afford the insurance? Can I afford not to have the insurance? Only by investigating the various insurance providers and comparing the available policies would you be able to answer these questions.

4 Long-term care insurance pays for long-term care services. Policies vary as to what they offer and what they cover. They require that all applicants qualify for coverage before a policy is issued. Most companies have underwriting guidelines and could reject your application. There is variance among long-term care insurance companies, so if one rejects you, you may fall under the guidelines of another company. Also, it s wise to investigate getting a policy early in life. The younger and healthier you are, the lower the premiums. During your investigation, keep in mind that you want the right coverage from the right company. Look for companies that have been around for a long time, are responsible with their pricing and have a track record of stability. The company should be able to answer all of your questions completely and demonstrate a commitment to you and your family. Always ask hard questions such as: What is covered in the policy? Will the premiums rise? Can I get coverage that accounts for cost-of-living increases? Will I be paying out of pocket first, then receiving reimbursements from the company? Or does company pay the bills directly? What will trigger my need to use long-term care insurance, and what will the waiting period be for the policy benefits take effect? A good long-term care insurance company and its agents will work with you to make sure the policy you re considering will fit your needs and your family s needs and will fall within your budget. There s always the hope that you ll never need a long-term care insurance policy, but having a policy gives you the peace of mind that in the event of a catastrophe, you, your family and your property are protected. Dr. Marion Somers, Ph.D., has more than 40 years of experience as a geriatric care manager and caregiver, and as an author, speaker and teacher regarding elder care and other elder issues. With the senior generation living longer than ever before, Dr. Marion believes we are on the verge of an elder care tsunami. After decades of working directly with seniors and their caregivers, Dr. Mari-

5 on launched a public effort to provide practical tools, solutions and advice to those struggling with caring for our aging population. She is the author of Elder Care Made Easier: Doctor Marion s 10 Steps to Help You Care for an Aging Loved One and creator of two iphone apps: Elder411 and Elder911. For more information, visit Tony Steuer, CLU Life Insurance Analyst # Ansel Avenue, Alameda, CA (510) , tony@lifeinsurancesage.com Author - "Questions and Answers on Life Insurance" - Connect: Google+: