My mother in law recently retired and was approached by a life insurance salesman who pressured her to “take care of her family when the time came.” But for a senior on a fixed income, is life insurance a good idea?
The cost of life insurance for someone over 65 can be quite high, since the chances that person will pass away are substantially higher than those of a younger person. But even if the senior can afford it, the real question seems to be whether it is necessary for the benefit of the beneficiaries, especially if they are the children of that senior. At that point in their lives, most children are no longer dependents, but are self-sufficient and don’t need for their parents to carry a financial burden to ensure their future.
But many senior parents, despite the change in relationship with their children, maintain a sense of responsibility for their welfare. When offered a chance to do something for their kids, especially when that something is wrapped in the right language, they will take it, no matter what the cost is to them.
In my mother in law’s case, we were able to talk her out of spending nearly $200 per month for the insurance—money that could be better spent on living expenses, travel or even gifts for the grandkids—but it was surprisingly difficult. Mom still felt as though it was her role to make sure we, and her other children, were provided for.
It may be a good idea to review all the insurance policies your parents own to determine whether they are an accurate reflection of the actual needs of both them, and their families. If you decide life insurance is a good option, you might want to shop around using an online life insurance brokerage that can compare multiple rates.
Some general rules when looking for insurance:
- Get All Insurance Proposals in Writing
- Don’t Feel Pressured. If your insurance agent is making you feel pressured to make a decision then maybe you need to find a new agent.
- Understand First, Sign Later. Don’t ever sign something you have not read and understand.
- Know Who You Are With. Make sure the insurance agent, broker and insurance company are properly licensed—you can contact your state insurance commissioner to find out who is licensed in your state.
- Obtain Full Disclosures. Ask for a full disclosure of all information relating to the benefits and possible negative consequences if you replace your existing annuity.