Looking for life insurance for a senior citizen? If you have a spouse, a family, an adult disabled child, an estate, or a business you want to protect, then life insurance is a necessity for you.
There are many other reasons you may need life insurance too. As we age, life insurance premiums become more and more expensive just based on age, even if our health is excellent. However, life insurance for senior citizens can be affordable. Here's what you need to know...
What Factors Affect the Cost of Life Insurance?
We all understand that as we age life insurance gets more expensive just based on age, but what are the other factors that can help keep premiums reasonable, or make them even more expensive? What's considered affordable life insurance for senior citizens would not be considered affordable premiums for 25 or even 45 year olds. Seniors must be realistic about the cost of life insurance premiums.
If you are 60 years old, your life insurance will cost more than when you were 50 years old. Obviously the older you are, the shorter your life expectancy is. If, like many of us, you have health conditions like diabetes or high blood pressure or high cholesterol, these will affect the cost of your insurance too.
Here are some of the factors life insurance companies look at in determining cost:
- Your age.
- Your height and weight.
- Your personal medical history.
- The medications you currently take.
- Your immediate family health history.
- Are you a smoker or a non-smoker?
- The results of your paramedical exam, blood and urine tests.
There are other factors that the insurance company underwriter will consider, including factors like your driving record, your finances, your extreme sport participation. There are financial guidelines and life style guidelines that are considered. All of these are considered in determining your rating (which determines the cost of your insurance).
Of course, the face amount and length of the policy (term or permanent) will affect premiums too, but we will consider these in a later section.
The Cost of Waiting to Buy Insurance
Today you are most likely as healthy as you will ever be. You are certainly as young as you will be! One thing to remember when getting affordable life insurance for senior citizens is that age is the first thing insurance companies look at. The cost for life insurance goes up every year, so locking in a rate as soon as you can is best. Always look for a policy where the premium remains level and you won't have any ugly surprises!
The difference in price between your 50's and your 60's may surprise you. Here's an example for you. These are the premiums for a male, purchasing a level 10 year term policy for $250,000 with a standard rating.
- At age 50, the monthly premium is $ 49.00
- At age 55, the monthly premium is $ 74.00 ($25 more than age 50- a 51% increase)
- At age 60, the monthly premium is $117.00 ($43 more than age 55- a 58% increase)
- At age 65, the monthly premium is $188.00 ($71 more than age 60- a 61% increase)
- At age 70, the monthly premium is $302.11 ($114 more than age 65- a 61% increase)
As you can see the premiums increase by a higher percentage as you age. There is a big difference between age 50 and 60 and it is generally true of any 10 year span. After age 60 the price increases come faster!
These numbers are for a 10 year term. What if you need coverage for a longer period of time? Yes, you're right...it will cost more. The longer the term, the higher the premium. If you will need or want coverage for your lifetime, then you should consider a permanent life insurance policy. Although this is a more expensive option than term life insurance, in the long run you would save money during the life of the policy. It would cost more if you continued to buy term coverage over and over to achieve lifetime coverage.
Why Buy the Longest Term You Can Afford?
Another way to reduce costs on term insurance is to buy the longest term you can get. A 20 year term life insurance will be much less expensive in the long run than one 10 year term you buy now, and another 10 year term you buy later.
Here's how a level term policy works:
When you buy a 10 year level term, the premium and the face amount of the policy remain the same for the first 10 years. Once the level period ends, the prices increase every year, and the initial increase is significantly more expensive than a new policy at the same rating. This is because when you buy a 10 year term policy, the insurance company is basing the rating, and therefore the premium, on your likelihood to live past the 10 years. Then by making the premium much more expensive at the end of year 10, you will give up the policy and they will not have had to pay out the death benefit.
You may not know that term policies usually have a conversion option that allows you to change all or part of your policy into a permanent policy with no requirements. Every company has it's own guidelines regarding how long you have the option to convert (x years or age y) and which permanent policies you can use in this transaction.
Some insurance carriers are more lenient than others. If you think you may want to exercise this option, you should discuss this with your agent, because you want a company with better conversion choices.
Conversion options can be a real benefit to you if your health changes to where you would be highly rated (more expensive life insurance premiums) or if you become uninsurable. There are no underwriting requirements for conversion. When you convert, you get the original rating you received at your current age. It's a great free benefit of your term life insurance policy.
How to get Help Finding Affordable Life Insurance
Many people like to shop online and think they don't need any help to get the best deal. Life insurance is different to shop for than other internet purchases:
- There are no price deals to be had! The prices are set by the insurance carrier for every age, face amount and term (or permanent policy). Then they must be approved by every state's insurance department. The prices are standard and there is no discounting, and no "sales"!! Sorry!
- You aren't just buying a policy- you are applying for a policy and the insurance company does not have to offer you one! That's what underwriting is for, to see if you qualify.
- (1) You can choose a fully underwritten policy (usually the least expensive) where you must take a paramedic exam and give blood and urine. The insurance underwriter can order your medical records to consider as well.
- (2) You can choose a simplified issue policy where there is no exam and no medical records are ordered. You have to answer a number of medical questions on the application.
- An online quote engine is not the way to go. An independent life insurance agent is your best secret weapon...and here's why...
(1) They will match you to the life insurance company that is most likely to give you a favorable rating. Although you may be approved by one carrier, you may be rated or declined by another because each carrier has slightly different underwriting guidelines. This alone can save you a good deal of money.|
(2) An agent with an in-house independent underwriter can have more assistance making sure to place you with the right company. Our underwriter can speak with the carrier underwriter, something most agents cannot do! It's one more advocate for you.
(3) Your agent will help prepare you for your paramedical exam and blood tests so that you can get the best results possible.
(4) Your independent agent has the ability to search many more companies than you can find online by yourself, giving you more options to find the best value.
(5) Your agent can explain the difference between policies. Some have built in critical care and chronic care riders. Some have better conversion options. Some carriers have more lenient underwriting on certain illnesses or lifestyle issues. Your agent should know which carrier is likely to be the best for your personal situation.
(6) If you are a challenging medical case, our underwriter can help us by doing an informal application. He would send out a summary of your medical issues to see if the carriers are willing to consider you. Of course, then a formal application, exam, and records would be completed for full underwriting before an actual offer would be made. This is one excellent way to find the best carrier for you without a lot of guesswork.
(7) If for some reason you don't get the rating you expect, our independent underwriter would review your file and make suggestions. If you need to apply to a different company, it would be a very quick process. We would use the first exam, and your medical records would be ready to go (these are not available to your agent). Once you signed the new application, you should have a decision within 1-2 weeks.
The Bottom Line
Life insurance for senior citizens can be affordable. You need to think about what your goals are so that your agent can help you find the right kind of coverage. Find an independent agent to help you make the best choices. If you want the best possible deal on life insurance, don't wait. Contact an independent agent today to see how we can help.