When you think of life insurance you probably think these policies are for young families, planning for the future of their loved ones to help them cope with debt and the everyday cost of living in the event of the worst happening unexpectedly.
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However, Baby Boomers, depending on their financial situation, might still want to consider life insurance. And although Boomers might face a challenge because of their health and age, it is not impossible
Nasser Zaermohammadi, AVP, National Training and Development Director, at Vantis Life Insurance Company discussed what Boomers need to know about life insurance.
Boomer: What is a single premium whole life (SPWL) insurance policy and what does it include?
Zaermohammadi: Single premium whole life insurance is funded with a single premium payment that is often a large amount, or lump sum. The size of the death benefit depends on the premium amount as well as the age, gender, and health of the insured. Like any other life insurance policy, a single premium whole life policy provides the named beneficiary with a guaranteed tax-free death benefit at the insured’s death.
A single premium whole life policy builds cash value, which can be borrowed against and is specifically designed as a wealth transfer tool. It is often used in estate planning, mainly to maximize an individual’s inheritance to their heirs, tax-free.
Boomer: Are Baby Boomers too old to purchase a SPWL policy?
Zaermohammadi: Born between 1946 and 1964, baby boomer’s ages range between 53 and 71, a perfect age to purchase a single premium whole life insurance. Baby boomers have a considerable amount of disposable income and, in some cases, seek to pass along part of this wealth to their heirs or favorite charitable organization at their death. Single premium whole life insurance allows baby boomers to maximize the value of “pass along” dollars to loved ones.
Boomer: If I am in my 50’s and have no life insurance, should I purchase a SPWL or term policy?
Zaermohammadi: That depends on a number of factors and individual’s circumstances. Events such as, college, career, marriage, family and retirements are part of the natural life cycle. To make sure that the hopes and dreams of individuals for their loved ones are not dissipated upon their premature death, the life cycle should be protected. Life insurance can be used to protect individuals against premature death, so their loved ones may continue their dreams, which may include, paying off their mortgage, funding their children’s education, travelling, and having a comfortable retirement.
Generally, people are more receptive to buying term insurance when they’re younger, have less income and have more responsibilities such as, mortgage payments, college funding, and saving for retirement. The need for insurance is usually changed to final expenses, estate costs, legacy, bequeaths, etc.
Purchasing a single premium whole life policy for any 50-, 60- or even a 70-year old individual who has set aside money is financially strategic, especially if they already have money earmarked for their heirs.
Boomer: What drives the price of a single premium whole life policy?
Zaermohammadi: Single premium whole life pricing is calculated using a number of factors such as, age gender, health, tobacco use and mortality in general. The older the applicant, the lower “pass along” death benefit. Of course, the proposed insured should be in reasonably good health to be issued a single premium whole life policy. Furthermore, non-tobacco users are provided with more favorable rates than tobacco users. Also, insurance rates for females tend to be lower than males because women generally live longer than men.