When you have elderly loved ones, it is important to think about the next few years, their financial security and that of their family and friends. Anticipating the potential problems they may encounter in the future is essential. For this, they are several types of insurance available for seniors, but it is not always easy to find the right insurance for them.
This article will aim to inform you about the different insurances available and will hopefully allow you to make more informed choices in the future.
Who is involved in a life insurance contract:
- The insurer – Issues the contract and pays the annuities or capital.
- The subscriber – Subscribes to the contract and pays the premiums.
- The insured: The person whose survival or death is guaranteed by the contract and who will be able to receive pensions.
- The beneficiary(ies) – The person who can inherit a lump sum upon the death of the insured.
The insurer undertakes to pay an annuity to the insured if they live beyond the estimated age of death. This annuity is equivalent to the amount of life insurance for which the subscriber wished to make regular payments (also called premiums), plus interest.
The subscriber must designate the insured and pay premiums in return, until the insured reaches the estimated age of death. Despite its name, life insurance is not a simple insurance scheme, but more a savings solution. It should not be confused with death insurance, which allows a significant amount of capital to be paid to the insured’s family in the event of premature death.
After its subscription, the contract evolves. New premiums can be paid, often automatically based on prearranged savings, surplus deductions. In general, the interest on the contract is reinvested. The subscriber may redeem all or part of the capital they have paid in a lump sum, if they need the funds. The amount of interest will decrease proportionally.
Together with the insurer, you define the amount of life insurance and the end date of the contract corresponding to the estimated date of death. The insurer will ask you questions about your health, family environment and income.
Your elderly parents can subscribe a life insurance at any time, but the tax benefits will change after a certain age.
Long-term Care Insurance
Long-term care insurance is a relevant solution for anyone who does not have sufficient savings, capital or income to finance end-of-life needs.
Some questions before committing to a subscription:
- What definition of dependency does my future contract use?
- Who determines the state of dependency?
- Are contributions refunded if the dependency occurs during the waiting period?
The state of dependency is defined as being restrictions in the performance of activities of daily and social life. These restrictions may be caused by behavioural and/or physical problems. The notion of dependence is used to describe the loss of autonomy associated with old age. In this respect, it differs from disability.
Dependency therefore refers to the total or partial loss of autonomy of a person.
In pension contracts, after recognition of the dependency, the insured receives the expected benefit, either as a monthly pension or as a lump sum. The payment of the benefit is, in most cases, accompanied by care services.
If they are never recognised as dependent, the funds paid by the insured are lost. Many people who require long-term care are suffering from an illness and find themselves unable to perform everyday tasks due to frailty or disability. Some reasons for taking out long term care insurance include:
- Having dementia, such as Alzheimer’s disease or pre-senile dementia.
- Contracting Parkinson’s disease or motor neuron disease.
- Look at the contract to see which GP is in charge of deciding on the dependency status. In the case of an independent medical practitioner, his or her verdict will have no reason to be questionable. However, if it is a practitioner working for the insurance company, it is possible that the latter may not always be transparent in his or her judgement.
- Some insurance companies that offer long-term care insurance contracts have their own definition of long-term care. It will not always be the same as the insured’s, so make sure to double check everything.
- Remember to properly assess the amount of contributions so as not to find yourself in a problematic situation. Indeed, in the event that it is impossible to pay the contributions, the contract will then be cancelled, and the sums already paid will not be refunded.
What’s the purpose of funeral insurance? Protecting your family by ensuring that they avoid paying for your funeral; this is the main argument used by funeral insurances contractors. Indeed, this type of contract makes it possible to fund a capital that will be used to cover funeral expenses when the time comes. In addition to the grief, the family does not have to bare this expense, which is not insignificant: The average cost of a funeral in the UK is £4,798 for a burial, with average cremation funeral costs at £3,744.
Preparing in advance for your funeral is the second argument of funeral insurance, since it helps to define how the funeral will take place. Thus, the subscriber can specify in a funeral agreement his wishes for the ceremony; burial or cremation, choice of coffin or funeral urn, transport, flowers… Generally, the subscriber who defines the nature of the services also designates a specialised funeral company to provide them.
This is less of a burden for the family, which, caring for the deceased’s will, may be hesitant in choosing services or even unwilling to do so. Moreover, it is not always easy to find your way around when, for the same product, prices vary depending on the funeral companies and regions.
Who are the beneficiaries of funeral insurance?
Funeral insurance offers a fairly flexible contract. In the same way that the capital can be defined, the subscriber can specify the beneficiary or beneficiaries in the funeral agreement. They can choose a relative (or several) who will receive the capital, in order to pay for the funeral. If there is too much money, the beneficiaries are required to share it.
For Travel Enthusiasts – Travel Insurance
Insurers are fond of statistics, so you won’t be surprised to know that the older you get, the more likely you are to get sick, whether travelling or at home. The first consequence is that travel insurance rates increase according to your age.
In addition to age, it is important to take into account the length of the trip. After 75 years, it usually becomes difficult to get insurance to go abroad. So, your loved ones would have to subscribe an insurance with a specialised insurer.
When travelling outside the country, leaving without travel insurance can have unfortunate consequences. Indeed, if you get sick or have an accident during your stay, covering your medical expenses can be very expensive.
If, in Europe, your elderly parents can still use their European Health Insurance Card and be reimbursed (under conditions, and sometimes partially), but it can be more complicated if they go outside the EU. For example, in countries such as the United States or Canada, a simple medical procedure or a day in hospital may cost them several thousand pounds.
Of course, insurance systems remain complex and very detailed, but we hope that this guide has given you a first overview of the different types of insurance that older people can subscribe. Taking out insurance is a commitment and making such a decision must be carefully considered, but when you subscribe the right insurance, they often prove to be very useful.
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