You have worked hard for decades, and now it’s time to retire and relax. People save up their hard-earned money to have a stress-free post-retirement life. But is your limited savings enough to live a good life post-retirement? In most cases, the answer is no. This is because; you tend to run out of your savings after some time.
From there, you have to depend on a family member to provide financial assistance. But with effective retirement plans, you can avoid being financially dependent on anybody. Life insurance for senior citizens is one such option, which we will be discussing in this article.
Life Insurance For Senior Citizens
When considering retirement plans, senior citizens should look at the insurance policy options. These plans provide them with a secure way to gain financial assistance. These are specially designed to make senior citizens financially independent and meet their financial requirements.
Types Of Life Insurances Available For Senior Citizens
When you are looking for an insurance option as a part of your retirement plan, you will come across the following options –
Term Life Insurance
Term life insurance is one of the most popular life insurance policies due to the wide range of features it provides. If you die prior to the expiry of the term, a predetermined amount of money will be provided to your beneficiary. It is one of the simplest types of retirement plans that you can consider. Every payment or premium that you pay will be contributing to the death benefits, which will go to your beneficiary upon your death. This amount can be either paid as monthly instalments, an annuity, or a lump sum. Typically, people choose the death benefit as a lump sum. Another reason people invest in term insurance plans is that they are affordable insurance plans.
Whole Life Insurance
On the other hand, whole life insurance is a permanent type of life insurance as it does not expire. This retirement saving plan comes with death benefits as well as a cash value. Moreover, the cash value accrues interest at a fixed rate, which is predetermined. Every month a certain percentage of the premium is added to the cash value of the whole life insurance policy.
This way, the policy offers a fixed rate of return. Moreover, the cash value of the policy will continue to grow over time and can be withdrawn when there is enough value. The reason why this policy is not as popular as the term plan is because it cost significantly more than the term insurance policy. Additionally, the policy will offer lifetime coverage as long as you continue to pay the premium.
Universal Life Insurance Policy
In this retirement saving plan, you get cash value similar to a whole life insurance plan. The premium you pay goes towards the death benefit and cash value. The factor that makes it stand apart is that you get to change the death benefits and premium amount while staying in the same policy. While you will need to maintain the minimum required premium to keep the policy activity, you get to use the cash value to pay for that premium. This means, if you have a good amount in terms of cash value, you can afford to miss out on premium payment completely.
Indexed Universal Life Insurance
Indexed Universal Life Insurance is a part of a universal life insurance plan. The difference between both insurances lies in the nature of the cash value. An index is defined as an investment group such as bonds, stocks, etc. The insurance provider does not directly invest in the market; instead, they use the performance and interest rate of a certain index to create the interest rate of the insurance policy. This form of insurance plan has a minimum guaranteed interest rate, so there is less risk of losing your money. However, the rate of interest is not fixed like other types of insurance policies.
Final Expense Insurance
It is also known as funeral insurance or burial insurance. It is similar to whole life insurance and designed to help your dear ones plan your funeral and end-of-life expenses. Arranging a funeral can be quite expensive; with final expense insurance, your loved ones do not have to carry this financial burden. This is among the popular retirement plans, as applicants generally do not have to take a medical examination to be able to qualify for this policy.
Instead, the coverage is provided based on the answers they provide on the application. Additionally, these policies are generally more cost-effective than other life insurance policies because the overall policy amount is shorter.
Variable Life Insurance
The money that you pay in variable life insurance is invested in a series of mutual funds from where you can gain decent growth. But the drawback of this policy is that you can also end up losing your money. The cash value of this insurance plan is similar to investing. Additionally, you cannot invest in any mutual funds that you want. Instead, your funds are only invested in a limited account that is available within the policy.
Variable Universal Life Insurance
As the name suggests, this life insurance plan is a blend of universal and variable life insurance. It allows you to adjust the death benefit and premium while investing in the cash value of the policy. However, there are the same risks that you are likely to experience in other types of the insurance policy.
When you are going through retirement plans, it should include more than your savings. In order to have a carefree post-retirement age, you need to sort your finances properly. If not, you will end up depending on others for financial assistance. An effective insurance policy is one of the ways that you can keep the flow of money coming even after your retirement. And, in India, insurance companies offer a wide range of insurance plans that are carefully curated to meet the needs of senior citizens.