It’s not uncommon for individuals who are purchasing a burial insurance policy to assume that they are covered for the rest of their lives. However, this is not always the case, as not all senior life insurance policies are permanent. Let’s take a look at the two most common types of life insurance policies.
The first type of life insurance policy is known as term life insurance. This type of policy is not permanent and will only cover the insured for a set period of time. The policy may be for a specific number of years or until the insured reaches a specific age. If an insured passes away during that period of time, the policy will pay the full benefit to the beneficiaries. If the insured outlives that period of time, the policy will simply terminate, and the insured will no longer be covered.
Term life insurance policies have grown in popularity for people of all ages. These policies are usually less expensive to obtain because there is a lower likelihood that the insurance company will have to pay out the death benefit during the term of the policy.
The fact that these policies are not permanent does not make them a bad option. These policies are a great fit for individuals who have a set goal in mind.
For instance, let’s say you have a 30 year mortgage with only 10 years remaining before the balance is paid in full. You want to ensure that your mortgage will be paid off if you pass away within that 10-year period of time. A 10-year term life insurance policy, with a face amount that matches the remaining balance on the mortgage, would be a great fit in this situation. If you live beyond the 10-year period of time and the policy terminates, there’s no problem. You no longer need the policy because your mortgage has been paid in full.
Some people will purchase a term life policy while they’re still in their working years. The policy ensures that the family will be protected from loss of income if the insured passes away prior to retirement.
The second type of senior life insurance policy is simplified issue whole life insurance, also referred to as burial insurance. As its name states, this type of policy covers the whole life of the insured, meaning it is permanent. There is not a set period after which the policy will terminate. As long as the insured makes the monthly payment, the terms and conditions of the policy remain in force.
Whole life policies are becoming very popular for seniors looking for a burial insurance plan and are most commonly used to cover burial costs or final expenses. An average burial insurance policy can range from $3,000 to $50,000, with the most common being a $10,000 policy. This type of policy ensures that the burden of funeral costs will not be passed on to those left behind if the insured passes away. Since these policies are smaller in value, they’re oftentimes easier to obtain.
Most insurance companies offer what is known as simplified issue whole life insurance. Typically, this type of policy asks very few health questions and does not require a paramedical exam. The majority of seniors that we work with can qualify for one of these policies, even if they’ve had some significant health issues.
It’s very important to understand the differences between the two main types of life insurance policies. When deciding which type of policy is right for you, analyze carefully the purpose of the policy. If the need for the policy only exists for a set period of time, then a senior term life insurance policy could be a good fit. If the need will last for the rest of the insured’s life, such as burial costs, then a permanent or whole life insurance policy would be the best fit.
If you have more questions about these types of life insurance policies or would like to explore the option that may be best for you, feel free to contact one of our senior life insurance specialist at 866-699-1884. We are licensed throughout the country and would be glad to help.