Life insurance is a good way to ensure that your loved ones are taken care of after you have gone. It could be used to pay off a mortgage, clear other debts, replace retirement income or cover funeral expenses. In some cases, you may simply want to leave some spare cash those that are left behind.
What type of cover should I choose?
Life insurance generally gets more expensive as you get older, so you it is a good idea to use a company that specializes in these policies. Term policies are generally cheaper, but if you survive beyond the end of the term, then the monthly premiums are lost. These policies will be limited by the age you take out the insurance, so if you are 85 you wouldn’t be able to get a Term policy for 20 years. Some insurers also won’t pay out for the first couple of years of such a policy, so only the premiums paid would be returned if you died within that period.
Whole life policies
Whole life policies, that pay out whatever age you are when you die, are more expensive and particularly if they are taken out at a late stage. In that scenario you could also find that the premiums you have paid in could exceed the payout, so you should discuss this with your insurance advisor. You will also want to consider whether your life policy is linked to inflation or not. Sums which seem adequate now may be worth much less in the future.Funeral cover
Some people simply want a policy to cover funeral expenses, in which case you choose a funeral plan and the costs are paid directly to the funeral home when the times comes.
Some policies also allow you to use dividends to pay for your premiums or you can borrow against the cash accumulation of your policy, but beware that if you don’t repay the loan, the cash value of your policy can decrease as a result.
Some policies for seniors don’t require medical examinations, but will still require you to complete a medical questionnaire to assess the level of premiums you should be paying. Life cover without a medical examination will be more expensive.
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