Burial Insurance or Senior Life: An easy way for you to pay for final expenses.
Mark Twain once said, "Life would be infinitely happier if we could only be born at the age of eighty and gradually approach eighteen." Can you imagine if that option was available? It certainly would present a whole new world of possibilities! But until scientists can make Mr. Twain's wish come true, we will have to live for today and plan for tomorrow.
Senior life insurance fills a need for final expenses.
80% of people over the age of 60 have—or have had—life insurance. Yet, burial insurance, often presented as senior life insurance may be the most common type of policy sold to retirees. Several reasons suggest themselves; the closer we get to those winter years, the more aware we often become of the need for something that will cover our funeral and final expenses and pay remaining bills without causing a hardship for our heirs. Another reason for a spike in small, often graded, final expense policies is that far too many people had policies in younger years that they surrendered or allowed to lapse.
According to 2013 data collected by Huffington Post, four of every 10 seniors lapse or surrender their policies. Again, various reasons can be cited. If the policy was term, a modified policy, or an inadequately funded universal, the insured may have experienced premium increases which make the policy unaffordable on a fixed income. If the policy was Term, it may simply have reached the expiration date. Or a person may have paid on a whole life or universal for many years and decided that the cash value was a better deal than continuing to pay premium.
Options for keeping the life insurance you already own
If you already have life insurance, hang onto it. You may need to discuss the premium with the beneficiaries to see if they can help pay it. You may be able to convert the policy to a lower face value if you don't need as much as you did once, and yet not lose the cash already in the policy. You might even explore a life settlement option, which will preserve the years of payments you put into the policy and yet give you a cash payout. Also, look closely at the information that came with the policy. Most people never look at their policies beyond knowing their premium and face value, but many polices even provide an early payment option if you should, as a senior, need a long term care plan for a chronic or terminal illness.
There may still be time to purchase the life insurance you need.
If you don't have life insurance, or simply don't have enough, you still have an option to purchase it. Final expense, or burial insurance is usually a whole life policy that is written with either limited underwriting or with no medical exam at all. The latter are referred to as "graded" policies because the company will require you to pay premiums for 2 or 3 years before they will pay the full face value. Nothing is ever lost, however; if you die during the graded period, the company will refund the premium plus interest, often as much as 10%.
An accidental death rider could be worth a look?
Burial insurance often has the option of an accidental death rider, and some companies will write them up to $25,000 for a fairly reasonable premium. Just be sure to look at the fine print. Some of the unsolicited offers you receive in the mail are modified policies—meaning the premium may be surprisingly low for the first year or two, but will then have regular increases. You want something with a guaranteed level premium—meaning it will never increase, and you want a face value that will remain level until the day you die.