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 considered a surprise, but financial advisors need to make sure to check in on seniors to ensure they're insured and that they've the right quantity of coverage.
Generally speaking, the typical person’s life insurance policy could vary from five to 10 or more times a person’s annual salary – depending on their age and various other factors – but seniors might 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 operate. 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 or not they have a spouse and when 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 likely to continue working because they need the income, and not simply to stay active, then they must be protecting against the possible lack of that income in this period of time,” 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 bear in mind that elderly employees are guaranteed access to fringe benefits – for example 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 would like 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 so far as benefits go. Financial Advisors need to cater their efforts individually, depending perhaps on that person’s age, income or health. Although the average life expectancy for U.S. residents has decreased to 76.3 years, according to a 2019 report from the Centers for Disease Control and Prevention – life insurance is still an ever present need.
Retirees require coverage too
When senior employees choose to leave the work world, many will still require and desire life insurance for various reasons. It might not be considered a light topic to discuss with potential or existing clients, but everyone must know the importance of life insurance. People who don’t get coverage – whether from insufficient education or the belief that it is too costly – run the risk of burdening surviving members of the family.