The first of the baby boomers will turn 65 years old this year. This huge group of Americans who came of age in the 1960s and early 1970s will likely have insurance questions and concerns that differ from those of their parents’ generation, according to the Insurance Information Institute(I.I.I.).
According to research by the Pew Research Center Populations Projections, every day for the next 19 years about 10,000 Americans will turn 65, and by 2030 18 percent of the nation’s population will have reached this threshold. The Pew data also indicates that many boomers, those born between 1946 and 1964, have a very gloomy outlook on their personal finances. Compared with other age groups, they are the most likely to say that they have lost money on investments since the most recent recession began in December 2007, and that their finances have worsened in the recent years. In addition, a higher number of boomers reported cutting spending in the past year, as compared with those already age 66 and up.
“Baby boomers have reinvented every life stage they have experienced and are likely to approach retirement and aging differently than previous generations,” pointed out Jeanne M. Salvatore, senior vice president of Public Affairs for the I.I.I. “Given this generation’s understandable concerns about their personal finances, insurance can provide an important financial safety net when it is purchased properly.”
Fortunately, there are ways for people over 65 years old to reduce their insurance costs, while getting the important financial protection they need for themselves and their families.
The I.I.I. provides the following insurance and safety tips for aging boomers:
1. Take a Look at Your Car
Older drivers have a higher rate of fatal crashes, based on miles driven, than any other group except young drivers. The primary reason for this high death is that older drivers are more easily injured than younger people and are more apt to have medical complications and die of those injuries.
It is important that your car be properly maintained in order to maximize its safety potential on the road. Older drivers should consider driving a car that is both easy to drive and provides the most physical protection for the occupants. When selecting a safe car, you should also check insurance costs, as the choice of a car can impact the cost of coverage.
If you are driving an older car, you can consider dropping the optional comprehensive and collision coverage on the vehicle, as this will also save money. As a general rule, if your car is worth less than 10 times the premium you are paying, the additional coverage is not cost effective. It is important, however, to continue to have adequate amounts of liability insurance in order to protect your assets in the event of an accident.
2. Get Driver Training
As we age, there are three key areas where most of us are likely to suffer some sort of impairment: vision; cognition, which includes memory loss; and flexibility declines, due to diseases such as arthritis. Fortunately, there are defensive driving classes specifically designed for aging drivers. Many insurance companies will also give a discount for taking an approved driving safety course.
3. Keep Your Home Insurance Up-To-Date
It is easy to become complacent about insurance when you have lived in the same home for a long period of time. However, for most people, their home is their greatest financial investment so it is important to make sure that the dwelling and its contents are protected with the right amount and type of insurance.
If you have made a major improvement or upgrade to your home, you may need more insurance coverage. Homeowners rarely upgrade their house without purchasing new items to put in their residence. And even those who have not made any upgrades to their home are likely to have accumulated a lot of things over the years, so it is important to discuss your home insurance needs with your agent or insurance company representative at least once a year.
And, remember, even if you have paid off your mortgage you should keep your homeowners insurance—even when no longer required to do so by the bank—because rebuilding a structure, and replacing your personal belongings, can cost hundreds of thousands of dollars. Depending on your location, you may also need separate flood and earthquake insurance, as these disasters are not covered under standard homeowners insurance policies.
Lastly, if you are an empty nester and are considering selling your home and renting or moving into a condo or co-op, you will still need insurance protection in the form of a renters or co-op/condo insurance policy. These polices will not only insure your personal possessions, but also provide liability insurance and cover additional living expenses in the event of a fire or other disaster.
4. Make Your Home Safer and More Disaster Resistant
Many older people may feel more comfortable living in a home with a sophisticated alarm system that alerts the police, fire department and even emergency medical services if there is disaster. These systems may also provide peace of mind for those who spend much of their retirement traveling and are away from home. The good news is that many homeowners insurers also give discounts of 15 to 20 percent off a standard policy if you have installed recognized safety systems. Most insurance companies will also give discounts for of at least 5 percent for simple safety devices such as smoke detectors, burglar alarms and dead-bolt locks.
You may also qualify for a discount if you make your home more resistant to windstorms and other natural disasters. Adding storm shutters and shatter-proof glass, reinforcing your roof, as well as retrofitting an older home to withstand an earthquake and modernizing heating, plumbing and electrical systems will not only make your home safer, but may also have a positive effect on your home insurance premium.
5. Consider Life Insurance
There are important financial reasons for maintaining your life insurance policy beyond the age of 65. Boomers are the quintessential ‘sandwich’ generation, and many will be nearing or entering retirement with responsibilities for both children and aging parents. Life insurance can help you fulfill your financial obligations, should you die with survivors who are both older and/or younger than you. Whole or Universal life may be a good choice for policyholders aged 65-plus because of the savings component. While life insurance is an important means of protecting financially a surviving spouse, disabled adult children or other dependents, some boomers may also want to use it as a mechanism to provide a donation to a beloved charity after they are deceased.
6. Look Into Immediate Annuities
There are many types of annuities, each designed for a specific financial goal. To help provide protection against outliving your assets, an immediate annuity may make sense. Social Security pays retirement income for as long as you live, as do defined-benefit pension plans, but the only other source of income available that continues indefinitely is an immediate annuity. An annuity may also provide some protection against creditors, as generally creditors can access only the payments from an immediate annuity as they are made, not the lump sum of money initially provided to the insurance company. Some state statutes and court decisions also protect some or all of the payments from those annuities.
7. Take Advantage of Discounts and Other Money Saving Tips
With boomers interested in cutting costs, there are fortunately many ways to reduce insurance premiums. The best ways to immediately cut auto and homeowners insurance policy costs are to shop around for a company that provides both a great price and outstanding service, take a higher deductible and ask about all available insurance discounts. Insurance companies offer a wide variety of discounts, such as for good credit.
Auto insurers will also give premium rate discounts for car pooling, a safe driving record and cars equipped with anti-theft devices. Some auto insurers will also provide discounts for those 55 years or older with safe driver records, as older drivers are less likely to drive aggressively or too fast.
Home insurers will generally offer discounts for those 55 years old and older who are retired. If you have completely modernized your plumbing or electrical system recently, some companies may also provide a price break.
8. Schedule an Insurance Review to Reflect Life Changes
You generally don’t live to 65 without a number of major life events and all these changes will have an impact on your insurance needs. Marriage, divorce, retirement, career changes and even adult children who move back home (sometimes with children of their own) should be reflected in your insurance planning. Make sure that your insurance professional knows about all of these changes, along with any major home-improvement purchases or property expansions, and get his or her advice on how to adjust your insurance coverages to match your life changes.