Life insurance policies often offer significant growth opportunity if consumers begin investing in them early on.
Individuals approaching retirement, however, have a few factors to consider before purchasing such coverage, according to a report by the Sacramento Bee. Certified financial planner Susan Soesbe advised a 74-year-old woman to consider her savings before purchasing a single-premium life insurance policy.
Those who have sufficient cash reserves to cover emergency expenses may be in a position to purchase life insurance, which can be used to protect dependents, cover final expenses and make donations to charity. The woman thought about buying a $100,000 coverage because her certificates of deposit had low return rates.
“While the policy you’re considering may have a stated rate of return that is currently higher than what certificates of deposit are paying, that rate needs to be adjusted downward to factor in other insurance-related expenses that CDs don’t have,” Soesbe said.
Experts advise those who purchase life insurance policies to have enough coverage to cover five to seven years of their income. This can ensure that survivors have the financial means to pay off personal expenses and debts the policyholder leaves behind.