More than Half of American Seniors Allow Life Insurance to Lapse
Life insurance is one of the most valuable assets a person can acquire in a lifetime. Serving as financial protection for a personâ€™s loved ones, this coverage can pay for everything from a policyholderâ€™s funeral expenses and final debts to medical costs while still alive.
Surprisingly, a new study shows that despite the benefits life insurance provides, policyholders often opt to drop their coverage later in life. However, becoming educated about the many perks of being insured, especially with permanent life insurance, may give seniors a reason to hold on to this essential coverage.
Americans Dispose of Life Insurance in Later Years
A survey conducted by ICR for The Lifeline Program revealed in September that an astounding 55 percent of Americans allow their life insurance to lapse in their senior years. The primary reason policyholders let their coverage go, according to the study, is that they view it as a liability instead of an asset.
While individuals may first purchase life insurance to offer their families financial support after they’ve passed on, many say that in time, their priorities change. Later in life, seniors are often more focused on immediate concerns like paying for long-term health care expenses.
To alleviate the stress that two of five participants say they feel when contemplating how they will pay for long-term medical care during their retirement years, they choose to drop one of their lower-priority costs: life insurance.
Permanent Life Insurance and other Alternatives to Canceling Policies
Due to the many benefits a life insurance policy can offer, seniors should consider affordable alternatives that keep their families financially secure in the event of their untimely deaths.
- Secure permanent life insurance.Â Seniors who currently have term life insurance policies may feel theyâ€™re wasting money, because of the short list of benefits these policies seem to offer. Itâ€™s for this reason that seniors should consider permanent life insurance (whole, variable or universal) that offer the opportunity to invest premiums and access investments while still alive.
- Search for coverage with an organization or financial institution.Â Permanent life insurance policies are undoubtedly more expensive than term life insurance policies; however, some organizations, clubs and financial institutions are connected with insurance companies in order to offer discounts to members. Consider searching for new coverage options under your current memberships to find an affordable policy.
- Consider life settlements.Â Another option to consider, though often viewed as controversial, is acquiring a life settlement. Life settlements allow people to settle their life insurance policies by selling them to a company in exchange for a portion of the policyâ€™s worth in cash. This could result in seniors accessing tens or even hundreds of thousands at one time. However, these settlements can quickly become predatory in nature if seniors work with companies deemed not reputable.
Life insurance policies can serve as an amazing lifeline for families that do not currently have enough money stored away to pay for a loved oneâ€™s final expenses or additional costs subsequent to death. So before seniors consider tossing their coverage, itâ€™s good to look at alternate ways to manage these policies.
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