Tuesday, October 21, 2014

Life Insurance Options for Older People

Life insurance is and will always be an important consideration for people of all ages, financial statues, the young and old and, single or married. It offers people feel the security and reassurance that their family members will be covered in an unfortunate event. This is something that probably is higher on the agenda for older people who wish to ensure that their spouse or dependants will be provided in the event of their death. Many companies now offer specific polices which are geared towards older people although the types of cover offered may vary. Different types of cover catered for different needs. This is why it is crucial to have a research around before you buy any type of insurance.

Whole Life Plans

This type of plan has no fixed end date and lasts until the policyholder dies. Then, as long as the payments for the plan have been kept up to date, a lump sum payment will be made to the policyholder's estate.

The main benefit of taking out a whole life policy is the fact that it has no fixed term. It is also possible to ensure that your estate can use the lump sum which is paid to cover any inheritance tax that may be incurred. This is done by putting the lump sum in trust and a specialist tax advisor will be able to provide detailed guidance on this issue.

There are several disadvantages to older people taking out a whole life policy. The payments must be carried on so that the policy does not lapse and this financial commitment may be difficult for people of an advanced age. Also the need for a high level of life insurance may decrease over time as dependents reach maturity and the need to provide for them lessens. Possibly the biggest disadvantage is that the payments for a whole term policy are often considerably higher than for a fixed term life insurance policy.

Fixed Term Plans

This type of life insurance policy runs for a set period, which is often about 25 years. If the policyholder dies within that period then a lump sum payment is made to the estate. However, if the policyholder dies after the policy has expired, even if it is only one day later, then no payment at all is made. Policyholders receive no return on their payments when the plan finishes.

The main advantage of a fixed term life insurance plan is the cost. The monthly payment will normally be quite low. It is also good if the policyholder is only looking to provide cover for dependents up to a certain point in their lives such as children completing university.

The disadvantage of taking out a fixed term life insurance policy is that it is impossible to plan exactly what will happen during the period of time that the policy will run and a longer-term policy may turn out to have been more suitable.

Whether you are interested in covering either yourself or a family member it is important to research on what is offered in the market. There are many different types of insurance policies and some may tick a few of the requirements boxes but not all. It is important to ask a person who deals with these issues before applying or purchasing a specific cover. Generally, an older person considering taking out a life insurance policy would be better opting for a fixed term plan unless they have genuine concerns over inheritance tax. If this is the case then it would be advisable to seek specialist advice before making a decision.

1 comment:

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