I guess before you can figure out if you need something, you have to know what it is and what it can do for you. Affordable whole life insurance products for seniors are available if you know where to look or actually if you know who to help you look! Here's what you need to know about whole life insurance.What is Whole Life Insurance?
Whole life insurance is the oldest form of permanent insurance. We are currently discussing the traditional whole life policy, not the final expense solutions available today (we will discuss those in a minute!) It has some great features such as:
- Usually premiums are guaranteed to remain level for your lifetime.
- The policy may generate cash value.
- The policy may earn dividends.
- You can access the cash value through withdrawals (which may affect your level premium) or through policy loans.
- The death benefit is usually level.
There are some disadvantages too.
- May only be available up to age 70 or 75. (A few carriers will write at a higher age.)
- The premiums are significantly more expensive than term policies (the difference being that a term policy is guaranteed to last for your lifetime).
- Traditional whole life policies are not written by as many carriers as other permanent products such as universal life and final expense policies so the prices are not as competitive.
- When you borrow from the policy, you will pay interest on your loan.
- If you die with an outstanding loan, the amount of the loan (plus interest accrued) is deducted from the death benefit.
- Finally, your beneficiaries don't get the cash value when you die. They only get the face amount of the policy (minus loans as applicable).
- Require full underwriting, and an exam, and can take weeks or months for an approval.
What are Final Expense policies?
Final expense policies are a type of whole life insurance. They are much easier to get approved for than traditional policies.
The many benefits are:
- Most companies offer coverage up to age 85 or 90.
- Face amounts are available from $2,000 up to $40,000. (To get a higher amount of coverage, you must apply with multiple insurance companies.)
- The face amount and the premium remain the same for the lifetime of the policy.
- They use "simplified underwriting". I will explain more about this in the next section!
- The insurance company may do an interview where they ask you the application questions on a recorded line. Then they will check a few databases and if everything matches up, you will be approved.
- Usually approval occurs within a week at most (assuming your application is complete).
- The cost will be less than traditional whole life insurance because the policy will NOT accrue cash value.
- Many companies offer this type of coverage.
What Exactly is Simplified Underwriting?
Simplified underwriting makes it easier to get approved for life insurance. It is used primarily on final expense whole life products for seniors. Here's what it's all about:
- The insurance carrier will check a prescription database. They will compare it to the answers on your application.
- The insurance carrier will check the Medical Information Bureau.
- You do not need to have a paramedical exam.
- You do not need to give blood and urine samples.
- The insurance carrier will not order your medical records.
On your application you must be able to answer no to a number of health questions such as:
- Are you bedridden, or in a nursing home, etc.?
- Do you require assistance with the activities of daily living?
- Do you require a wheelchair?
- Do you use oxygen equipment to assist breathing?
- Have you ever been diagnosed with AIDS, Alzheimer's, ALS, MDS, or certain other serious illnesses.
- Then there will be more medical questions the past few years.
If you can answer no and your answers match up with the database information, you will be approved. As you can see the process is simple and that's why and how these policies can be approved so quickly.
One important thing to know is that every insurance carrier has somewhat different underwriting guidelines. You may find that you cannot answer no to all of the questions with one company, but you can with another. Simply stated, you may be able to get coverage with one carrier, but not another. Your independent life insurance agent will be able to help you get to the right carrier- the one that will approve your application. That's one excellent reason to use an independent agent- they will have many carriers available to consider.
Are there Any Other Choices?
Yes, there are universal life insurance policies. Here are the important facts about this option:
- They can be structured so that the premium and the face amount remain the same for your lifetime.
- They can be set up so that they do not accrue cash value, which will usually make them less expensive than a whole life policy.
- These policies under full underwriting. You are required to have a paramedical exam, have blood drawn, and provide a urine sample. Your medical records will be ordered by the underwriter.
- It can easily take 6-8 weeks to be approved for this policy.
- The lowest face amount is $25,000. If you want less coverage, this type of policy is not available for you.
What if I Can't Get Any of These Policies?
If you can't qualify for any of the above policies, there is another option for you. It is called Guaranteed Issue Life Insurance.
- There are no medical requirements.
- Everyone who applies is approved.
- You can get between $5,000 and $25,000 of coverage.
- It is available from ages 50 through age 80.
- In the first two years there is only full coverage for death from an accident. If you die from illness, your beneficiary will receive all of the premium you paid plus interest.
It's nice to know that there is an option for everyone, even when you can't qualify medically.
How Does It All Work?
I will tell you what we do for our clients! When we have a senior who is looking for coverage first we find out a little bit about you. (And of course the same applies if you are looking for coverage for your parent, grandparent, etc.)
We need the following information before we can give you a quote:
- Your age and/or date of birth.
- Are you male or female?
- What state do you live in? (Every states has laws that govern the sale of insurance. Not all companies and products are available in all states.)
- Your height and weight.
- Your medications and medical issues.
- The amount of coverage you are thinking about.
Then we have a discussion. Sometimes you aren't certain how much insurance you need or want. Sometimes we discuss how much you can afford and that gets us started. The thing to remember is that we work with you and your budget.
How Do I Choose?
Well, we help you choose based on a number of options.
- If you want less than $25,000 of coverage your best option is final expense coverage.
- If you don't want to take an exam than you will be looking at final expense coverage.
- If you want $25,000 to $40,000 of coverage, we discuss your medical history and help you decide if final expense or universal life will be the better priced option for you.
- If you want over $40,000 of coverage it may be best to look at universal life first. If you can get a good rating, it will be the least expensive way to go.
Again, we help you find the product that you are most likely able to be approved for and explain it to you. It doesn't matter if another type of policy or another carrier has lower premiums if you won't be approved! We will always look for your best choice. It's what an independent life insurance agent should do.
We have an in-house underwriter who can help us if you have any issues. They know more about the medical underwriting that insurance carriers use to determine your rating. The rating determines the price of your insurance. Usually an agent cannot speak to an insurance carrier underwriter, but our underwriter can. That little bit can sometimes help get you a better rating if you are right on the fence. We will use every trick in our bag to get you the best rating possible.
What's the Next Step?
Talk to an independent agent about your life insurance needs. They/we have quote engines with many different carriers for all the different types of term, universal whole life insurance products for seniors. You can't easily find these quotes on your own. This type of insurance is not user friendly! There are too many factors that need to be considered for you to get an online quote by yourself. And as I mentioned before, you may qualify with one company and not with another!
The Bottom Line
There are numerous carrier choices and various types of term, universal and whole life insurance available for seniors. Your best advocate will be an independent life insurance agent. They have a long list of carriers and products that they can search to find you the best life insurance to achieve your goals.