It's no surprise that seniors want to get a good deal. Who doesn't Life insurance for seniors over 65 can vary widely in the pricing so you need to know how to get that good deal. There are different things you can do...and here are some of them.What Type of Policy is Best for My Situation? Why?
Although term insurance is likely to be less expensive than permanent at age 65, the older you get the closer the pricing gets. In some instances you may find that permanent life insurance costs less than term insurance. First thing is to determine how much insurance and what type of policy is best for you. An agent can be very helpful. Here are the different insurance options with a brief description:
- Term Life Insurance- We like level term. The premium and the face amount remain the same during the term period. After that the price usually skyrockets. This type of insurance may be a good choice if you need coverage for a specific period of time (for example if you are insuring a loan).
- Universal Life Insurance- A guaranteed premium universal life policy can be structured so that cash does not accumulate and the face amount and premium do not change for the life of the policy. An easy way to think of this is that it's like a term policy for life. This is going to be the least expensive type of permanent coverage. It's important to get a policy that guarantees the premium to remain the same.
- Whole Life Insurance- This is a permanent policy that will amass the same amount of cash as the face amount. Because it accumulates cash it will be more expensive that the prior universal life policy. You can borrow money out of the policy but that may affect the premium. Also, when you pass away, your beneficiary will usually receive only the face amount and not the additional cash in the policy. There are fully underwritten policies and some with simplified underwriting.
- Simplified underwriting Whole Life Insurance- is often called Final Expense Life Insurance. These policies range between $2,000 and $40,000 of face value. No medical exam is required and they are relatively easy to obtain. They are your only permanent option under $25,000.
- Guaranteed Issue Life Insurance- If you cannot qualify for any of the above types of life insurance, you can still get some coverage. Guaranteed Issue coverage will be the most expensive because there is no medical underwriting, however the policy doesn't pay the death benefit for the first 2 years. During the first 2 years the premiums paid would be returned with interest.
Yes, You Do Need Help!
Here's the good news...you can't do this on your own. You need to work with an agent when buying senior life insurance. We suggest an independent life insurance agent who specializes in life insurance for seniors. You will have an advocate to help you make informed decisions. Some of the reasons you need an agent are:
- You can only get term life insurance quotes on-line. They may not be accurate because a quote engine can only get so much information and there are many things that can impact the pricing.
- You cannot get quotes for universal life insurance or whole life/ final expense life insurance policies. You must talk to an agent.
- You need an agent to make sure you are looking at the right type of policy for your situation and your budget.
- An independent agent can search a database of many insurance companies to find you the company that will get you best price. Remember, you have to qualify medically for coverage, so be truthful with your agent so they can have you apply to the right company. This is one time where surprises are usually not good!!
- Every company has slightly different underwriting guidelines. This is good for you IF you work with an agent that is familiar with the differences. Applying to the lowest cost company is not a failsafe way to go UNLESS you can qualify with them. If you are rated more poorly than expected, they may not be the least expensive company at the new rate. This is why it's so important to tell your agent the truth.
Getting Life Insurance for Seniors over 65
Getting life insurance for seniors over 65 can be very straightforward. First, find an agent you can trust. Second,discuss your reason for insurance and how much you want. Your agent will ask some basic info like age, height and weight, your state, and some medical info. Third, your agent will explain why one type of policy makes the most sense. Fourth, it's time to apply for coverage.
Other Ways to Improve the Price
- Did you know that there are price point breaks? $250,000 and $1,000,000 of coverage are points where the price per thousand dollars of coverage changes. Often a $200,000 term policy costs almost the same or more than a $250,000 policy.
- Did you know that if you pay annually or semi-annually it will cost less than paying monthly?
- Some companies use your actual age, and some use age nearest (meaning you become a year older the day after your half birthday!). You can legally backdate most policies for up to 6 months and if that makes you a year younger for rating purposes it can make sense. However, you have pay for those months where you didn't have the coverage. Talk to your agent and see if you are in a position where saving age makes sense for you.
- Underwriting guidelines on universal coverage are usually less stringent than term life guidelines. If the pricing works, you may be able to get a better rating on a permanent product.
- Some carriers have a special deal on permanent products where you may qualify for a "Table Shave" program which can improve your rating by 3 categories. (Policies are rated from best down starting with preferred best, preferred, standard and then table ratings).
Remember your agent should know all about these and more ways to help you get the best deal. Some agents have an in-house independent underwriter to help with cases. (We have one!) Here's how he helps us:
- Our underwriter keeps us in the loop about how companies are changing their underwriting.
- For example, we would call and explain your medical issues, age, face amount and type of policy you want.
- Our underwriter will tell us which companies are most likely to underwrite your issues more favorably. Perhaps more importantly, he will tell us which companies to avoid.
- Our in house underwriter can contact the insurance company underwriter, which is something agents generally cannot do.
- Going to 2 agents and writing 2 applications doesn't help. You can't pit one company against another because rates are set and approved by state insurance departments...there is NO negotiation on rate. When insurance companies see you applying to multiple carriers they are less inclined to think you are serious. You must tell each company that you are applying to another company. They can ask how much insurance you plan to accept.
- By choosing one agent, you apply to the best company for you. If underwriting is unfavorable, your agent should have access to your exam and any medical records ordered so that if another company will be better (now that we now all of the information) another application will underwrite very quickly. (You won't have to do another exam, you will only have to sign a new application.)
The Bottom Line
There are many factors that go into finding the most affordable life insurance for seniors over 65 or anyone else for that matter. Take advantage of the knowledge and experience of an independent agent to help you get the best value.