When a recession occurs, many seniors think about cutting costs to save money. As a result, some may not want to make room in their budget for a life insurance policy. But there are many reasons why it’s smart for seniors to have life insurance, particularly during a recession. Some of those reasons include providing a financial safety net for your beneficiaries and covering final expenses. Here’s why life insurance can be essential during a recession:
Provides a financial safety net for beneficiaries
Senior life insurance can keep your family from struggling even more during hard economic times. Your beneficiaries can use the benefit from your policy to replace the lost income. They’ll be able to continue paying for daily living expenses until they can generate their own income. It can also cover future expenses like your grandchild’s college tuition.
In contrast to payments given through inheritance or an estate, the death benefit your beneficiaries receive will be tax-free. Some life insurance policies are also immune to stock market fluctuations. As long as the premiums have been paid, your family will receive the policy’s full death benefit no matter how much stocks increase or decrease.
Provides cash to borrow when needed
During a recession, you may be short on the funds you need to keep paying off your debts. If you have a permanent life insurance policy, you should be able to borrow against the policy’s cash value . The money you borrow won’t affect your credit, and there’s no approval process.
Keep in mind that it’s also not necessary to explain what the money will be used for. You’re free to use it for financial emergencies or even vacation expenses. But be mindful that if you don’t pay back the loan before your death, the loan amount plus any interest owed will be subtracted from the death benefit your beneficiary receives.
Covers end-of-life expenses
The average funeral can cost anywhere between $7,000 and $12,000. A life insurance policy like final expense insurance can help seniors avoid burdening their families with end-of-life expenses if they pass away . This type of permanent life policy provides a small death benefit that can help your family cover final costs related to your death, like medical and funeral bills.
The bottom line
Life insurance is an important part of any financial plan, especially for seniors during a recession. Taking the time to compare policies and find the best coverage can help provide peace of mind in an uncertain time. Keep all the points above in mind when deciding to get senior life insurance, and consider talking with a licensed insurance agent to discuss your coverage options in more detail.