Senior life insurance rates can vary
greatly between companies. How can you be certain to get the best rates? Here are all the facts you need to understand how to get the lowest premiums.
Different Types of Life Insurance Available for Seniors
When comparing life insurance rates, you first have to make sure you are looking at the same types of policies. The following life insurance policy choices are available to seniors:
- Term life insurance
- Final expense life insurance
- Graded final expense life insurance
- Universal life insurance
- Traditional whole life insurance
- Guaranteed issue life insurance
If you are comparing a term policy (first on the list) to any of the other types of senior life insurance listed above (all permanent policies), you will find big discrepancies in the pricing. Term life insurance has premiums that stay level for a specific period of time. When you reach the end of the term period, the premiums increase dramatically and continue increasing annually.
Generally, permanent policies do not change premiums or face values for your lifetime. This is the main reason for the difference in cost between term- and permanent policies. Your goal is to find the least expensive senior life insurance product that meets your needs and those of your loved ones.
You can pay a wide range of prices for the exact same coverage. For example, if you are looking for a permanent policy with a value of $50,000, the array of premiums quoted by insurance companies will vary. You need to know that you are paying the lowest premium available for the senior life insurance product that is right for you.
The important pieces of information here are to be sure you are comparing the same types of coverage, the coverage will allow you to achieve your goals, and that you are getting the best value available.
Lowest Price Senior Life Insurance Policies
With its defined end dates—after which premiums rise considerably—term life insurance is the least expensive senior life insurance available, and it is a useful product in the right situation. A good independent life insurance agent can explain the many permutations and riders available in a term life insurance policy.
Permanent senior life insurance policies are listed below, in order from lowest cost to highest:
- Universal life insurance (specifically a guaranteed universal life policy with no cash accumulation)
- Final expense life insurance>
- Graded final expense life insurance
- Guaranteed life insurance
Although universal life insurance policies offer the least expensive permanent coverage, they do not work for everyone. The face value of such policies begins at $25,000, $50,000, or $100,000, depending on the state in which the insured resides. Additionally, this type of coverage requires a paramedic exam, including blood and urine testing, and some carriers may request medical records. This type of coverage takes, on average, 6–8 weeks from application submission to full coverage, if the applicant is accepted.
Final expense life insurance uses more simplified underwriting. Medical exams and records are not required, and the policy can be in force within a day. However, the applicant must answer a number of medical questions, and the insurance company checks a prescription database and the Medical Information Bureau to confirm the answers. The face amount and premium remain the same for the life of the policy.
Graded final expense insurance has the same application requirements as regular final expense insurance, but it costs a little bit more because the insured is determined to be a higher risk for the underwriter. “Graded” means that the policy phases in over 2–3 years (depending on the insurance company). If the insured passes away due to any medical condition within the graded period, the beneficiary receives all premiums paid, plus interest (usually about 10%, although it can be lower). If death is accidental, the beneficiary receives the full payout of the policy. After the graded period is over, and upon the passing of the insured, the beneficiary receives the full face amount of the policy, no matter the cause of death.
Guaranteed life insurance is the easiest product for seniors to purchase. However, you should only consider guaranteed life insurance as a last resort, because it is the most expensive senior life insurance policy available. It is a product designed for those seniors who cannot qualify for any other type of life insurance coverage. There are no medical requirements but, just like a graded final expense policy, guaranteed life insurance also has a waiting period of 2–3 years while the policy phases in slowly. The same rules for payouts apply, as well: if the insured passes away during the phasing-in, beneficiaries receive premiums plus interest or a full payout, depending on cause of death. If the insured dies after the policy is fully in place, the beneficiary receives the full value of the policy, regardless of the means of passing. Although this product is more expensive, the good news is that everyone has at least one option for protecting their loved ones with a life insurance policy.
Why Choose One Senior Life Insurance Company Over Another?
Once you’ve chosen the senior life insurance product type and policy amount that are right for you, you can get a quote for coverage. So, why not just choose the least expensive policy available that fits your parameters? There are several reasons.
- Most important is that every life insurance company has slightly different underwriting requirements. An applicant may be approved by one carrier and declined by another, for reasons that are simple, transparent or completely incomprehensible.
- If an applicant goes to the internet and simply chooses the insurance company with the least expensive rates for their chosen senior policy, the applicant may not be accepted. Once a decline is on your life insurance application record, you can be prevented from getting coverage from some final expense carriers for up to 2 years. That’s not a risk not worth taking, especially for seniors who are anxious to settle affairs and spend worry-free time with their loved ones.
- This is why an independent senior life insurance agent is so valuable. A knowledgeable senior life insurance agent represents many insurance carriers and is aware of the differences between them. Once you speak to an agent and explain your needs, as well as your pertinent medical history that carriers may examine, the agent can quickly narrow down options, explain the variations in application rules and rates across companies, and help you choose a carrier that you can afford and depend on.
The ultimate goal is to find you the best rate on your preferred product among the companies that are most likely to approve you. Life insurance can be easy to purchase with help from an independent agent.
Get the Best Senior Life Insurance Rates
Now that you understand the different senior life insurance products that are available, as well as how and why rates vary between insurance carriers, you are ready to speak with confidence to an independent agent about your life insurance needs. A good agent will help you navigate the maze of senior life insurance options and will get the best rate for the insurance policy that is best for you.
These experts know how to make the process of getting life insurance straightforward and anxiety free so that you can move into your happiest years with surety, knowing that your loved ones are taken care of.
To talk to the senior life insurance specialists at LifeNet Insurance, call (800) 698-7033.
Lenny Robbins is the owner of LifeNet Insurance Solutions, which specializes in life insurance policies for seniors and Baby Boomers. With over 40 years’ experience in financial services, including the last 26 exclusively in life insurance advising, Lenny is an expert agent with diverse knowledge of the products available to clients moving into their best years. Lenny is committed to establishing client trust and ensuring they are covered by the best policies for themselves and their dependents. He takes pride in knowing that clients return to LifeNet for advice and assistance as years pass and families grow.