If you’re a senior reading the headline of this article, or about to be, you may have let out a groan when you saw it. You likely wish you never had to pay another insurance premium for the rest of your life.
But being a senior doesn’t negate the need to protect yourself, your family, and your personal assets if the unexpected happens. You’ve worked hard over the years to build wealth for you and your loved ones, and you’d like to enjoy the fruits of your labor.
Homeowners and auto insurance are two non-negotiables for as long as you own a home and are driving. Life, disability, and health insurance are still integral parts of a sound financial plan.
Let’s consider all three of these individually. We’ll examine what your options are and the best way to go about procuring the coverage you need.
Consideration #1: Life Insurance
According to the Life Insurance Marketing and Research Association (LIMRA), people that purchase life insurance own an average of seven policies over their lifetime. This holds true for many people that purchase policies when they marry, after the birth of a child, or when they buy a new home and start making mortgage payments.
If you’re like the majority of people, you probably bought term life insurance when you had a significant life event. According to the Insurance Information Institute, in 2019, 71% of consumers who own life insurance have a term policy, up from 63% in 2017.
If you bought a term life insurance policy when you were younger, you have very likely experienced your term rates rise considerably, perhaps even to the point where you no longer were able to continue paying the monthly premium and subsequently let the policy lapse. This might have left you vulnerable to financial hardship for your beneficiaries if you were to die.
Another type of life insurance you may have carried, but no longer have, is group life insurance. Many people get a multiple of their annual salary covered by life insurance through their employer’s group plan. However, if you’ve left that employer, then you’ve left that life insurance benefit behind.
If you find yourself without life insurance, or an amount that is inadequate to meet your financial needs when you die, there are several options at your disposal:
· Guaranteed Issue Life Insurance: It’s possible that over the years, your health has declined to the degree that you are no longer an acceptable risk to insurance companies for a standard term or whole life policy.
Guaranteed Issue Life provides you with the opportunity to purchase life insurance regardless of your health history. Face amounts offered are often lower than standard term insurance policies, and there is a qualification (waiting) period before benefits are payable.
· Final Expense Insurance: Though you may already have life insurance protection in force, it may be earmarked for living expenses for surviving family members or estate tax purposes. Final expense insurance is an excellent supplement to those policies, as well as being beneficial if it’s your only policy.
According to Wall Street Call, today’s average funeral costs can range from $10,000 to $15,000. This can place a considerable financial and emotional burden on family members if it isn’t funded in advance. Final expense insurance guarantees that your last wishes will be carried out and your survivors will not bear the burden of using funds needed for other essential purposes to cover funeral and burial expenses.
Consideration #2: Health Insurance
If you’re a senior and you or your spouse are still employed, you may very well be covered by private health insurance through a group insurance carrier, or covered under an individual health policy. And depending on cost and coverage, staying with this insurance may be your best choice.
But if you’re age 65 or older and your health insurance premiums have become exorbitant, or you don’t have health insurance, Medicare is probably your best solution.
Medicare is a government-provided health plan for those over age 65 or people with a qualifying illness. When enrolling, it requires you to understand the various parts it consists of and decide what coverage you want.
· Part A is hospital coverage. It includes inpatient care, skilled nursing facility, hospice, lab tests, surgery, home health care, prescription drugs when you’re in the hospital, and other benefits. There is no premium for Part A.
· Part B is primarily for doctor’s office visits. It also covers outpatient lab work, durable medical equipment, some preventive services, and other benefits. Part B does have a monthly premium, which is $144.60 in 2020.
· Part C is also known as Medicare Advantage. This option provides you with the same benefits as Parts A & B, as well as additional benefits. It’s offered through insurance companies and replaces Parts A & B if you so choose. Advantage plans most often include prescription drug coverage. Premiums vary from insurer to insurer.
· Part D is prescription drug coverage and has a monthly premium, which averages $32.74 in 2020. Drugs are covered on a tiered pricing basis, and not all drugs are covered.
You can enroll in Medicare the month of your birthday, as well as the three months before and the three months after.
Consideration #3: Disability Insurance
You probably have been covered under a group disability policy where you worked or had an individual policy if you’ve been self-employed. Disability policies typically will replace 60 percent of your before-tax income, often until you’re age 65 (depending upon your policy).
Disability insurance is often the last piece of the insurance puzzle people consider, though it very well may be the most important. The Social Security Administration reports that 25% of Americans will experience a disability in their careers before retirement age, underscoring the need to protect your income.
If you’re over age 60 and don’t currently have disability insurance, it’s unlikely you’ll be able to find an insurer that will issue it at this point. If you’re under age 60, you should apply for disability insurance as soon as possible since the cost will rise each year you get older. Bear in mind that most disability insurers won’t pay a benefit once you turn 65.
Social Security Disability Insurance (SSDI) is another option you have if you become disabled. However, most people find applying for it to be very time consuming, and a relatively low percentage of claims are approved.
As a senior or a person approaching that stage of life, insurance is still an essential part of your financial security. A licensed insurance agent or your financial advisor can help you evaluate your current coverages and fill in the gaps, if necessary. Don’t let a lack of planning disrupt your sunset years.