Should Seniors Allow Life Insurance to Lapse to Save Money?
Caregivers have a wide range of responsibilities, sometimes stretching to the financial matters of their charges. Fixed income seniors are often facing little-to-no income, high prescription costs, and rising healthcare costs in general.
Studies have shown that over a quarter of seniors let their life insurance lapse. Sometimes this is because of financial reasons. Some people intentionally let their insurance lapse because they don’t think they need it anymore. Insurance needs can decrease as we age and as our loved ones become financially dependent, but it’s important that you review life insurance options with the person in your care and make sure their needs are being met.
Most people don’t fully understand life insurance, so it’s important to explore all of the pros and cons, some of which are outlined below.
image source: Moyan Brenn
What Needs Could Require Coverage?
Insurance can cover everything from long-term care to burial needs. If you are the caregiver for someone who lives in their own home, you may look into particular renovations that might be necessary for their physical needs. This includes things like accessible entrances, which as this wheelchair ramp guide shows, are sometimes covered by insurance policies.
If you are taking care of an elderly relative in your own home and want to receive aid from the state, your home may need to meet certain requirements like height requirements for handrails, and ADA accessibility laws.
What are the Dangers of Allowing Life Insurance to Lapse?
While an insurance policy is in place, the person covered has leverage. They may be protected from rate changes when they renew, and can usually negotiate by showing they’re shopping around and looking at other rates. Once a policy lapses, however, most of that leverage goes away. The need for medical exams is more likely, and negotiating power is almost none. Companies are less likely to fight to get a new client than they are to keep an old one.
What to do When Money is the Concern?
For many seniors, especially those on a fixed income, paying for life insurance may seem like an unnecessary expense. For these situations, it’s best to look into low-cost burial plans and other options that cover funeral expenses. This at least keeps loved ones from being left with large bills after the senior passes on.
But for those with long-term care needs, life insurance may help cover care costs. This, along with the rising cost of prescriptions and health insurance means that it would be better to cut costs in other areas rather than life insurance. Sit down with those you care for and discuss their priorities and whether insurance is worth the cost. If it is, there are a few ways seniors can cut costs in other areas.
Free bus passes
It’s been shown that free bus passes help seniors stay healthy, as well as offering a safe mode of transportation and important socialization opportunities. See if your area has a senior bus program.
Free recreation passes
See if any local recreation centers offer senior passes. This helps encourage exercise such as swimming while giving them a chance to get away from home
Make Some Income from a hobby
Help them find a craft hobby they can do for fun and relaxation. They may be able to sell items at local fairs, in consignment shops, or even online!
These are just some of the factors revolving around senior life insurance. Have more tips? Feel free to share in the comments below!