Despite reports that average life expectancy has declined, many people still plan to keep working past traditional retirement age, whether for financial reasons or because they’d be bored otherwise. This may not be a surprise, but financial advisors need to remember to check in on seniors to make sure they are insured and that they have the right amount of coverage.
Generally speaking, the average person’s life insurance policy could range from five to 10 or more times a person’s annual salary – depending on their age and various other factors – but seniors may want to follow a different rule of thumb.
Walter Zultowski, a principal of a market research and consulting firm that specializes in the life insurance and financial services industries, told USA Today that elderly employees should instead multiply their annual salary by the number of years they plan to work. Consumers should opt for coverage that they feel will sustain their household, as well as meet financial obligations upon their death. The needs could vary based on whether they have a spouse and if they work, any dependents, or outstanding debt or investments.
The various final costs that seniors’ life insurance can cover include estate taxes, uncovered medical bills, funeral costs, outstanding debts, and future financial needs for a spouse, according to the Life and Health Insurance Foundation for Education (LIFE).
“If seniors are planning to continue working because they need the income, and not just to stay active, then they should be protecting against the possible loss of that income during this time period,” Zultowski said to the source. “This is especially true if these seniors primarily owned term, which may now be expiring, and/or have reduced group life benefits due to a job change or reduced benefits from their employer.”
Agents should keep in mind that elderly employees are guaranteed access to fringe benefits – such as health and life insurance – by the Older Workers Benefit Protection Act. It is illegal for employers to deny them access to such coverage.
They can, though, reduce benefits to older workers if their coverage requires significant costs. Seniors who want enough to guarantee future comfort then may seek out other providers to fill any gaps in coverage.
Emphasize affordability for Seniors
In the USA Today report, Marv Feldman, CEO and president of LIFE, said a policy purchased from a private insurer with a relatively small death benefit can be more affordable than some consumers think. He said that a healthy 65-year-old man would pay about $160 a month for 10 years for a policy with a $250,000 death benefit.
As with any insurance policy, coverage needs vary greatly from person to person depending on their circumstances and desires as far as benefits go. Financial Advisors need to cater their efforts individually, depending perhaps on that person’s age, income or health. Even though the average life expectancy for U.S. residents has decreased to 76.3 years, according to a 2016 report from the Centers for Disease Control and Prevention – life insurance is still an ever present need.
Retirees require coverage too
When senior employees decide to leave the work world, many will still require and desire life insurance for various reasons. It may not be a light topic to discuss with potential or existing clients, but everyone needs to know the importance of life insurance. People who don’t get coverage – whether from lack of education or the belief that it is too costly – run the risk of burdening surviving family members.