As more and more of us are reaching our golden years, term life insurance for seniors is a topic we may hold near and dear. There are many ways to get information and quotes for term life. Unfortunately they are not all equally beneficial and the advice you get will vary from place to place. Here are some examples of the worst advice you could find and how to avoid making those mistakes.
Buy the Cheapest Policy You Can Find
Truth be told, we all want the best deal we can get. When it comes to life insurance the buying process is different than making a purchase of furniture, a TV or any other commodity. Once you know how much insurance you want and for how long you have to figure out how to get the best price.
You have to qualify for life insurance. The factors that come into play are:
- Your build- your height and weight. This is the first thing insurance companies look at.
- Your current health- Are you healthy? Do you take medications? Are you compliant with your doctor's orders? Do you have any medical conditions? Are they well controlled? Etc.
- Your health history- Do you have prior health issues? Perhaps a heart attack? Or a stent? Or a stroke? Etc.
- Your family health history- Many companies factor in parents or siblings history if it includes cancer, diabetes and certain other diseases before age 60.
- Your lifestyle- Are you a private pilot? Do you climb mountains? Race motorcycles? Do any extreme sports?
These are some of the major concerns insurance companies will investigate when you apply for insurance.
If you go online and find a quote engine, it may ask some general questions to help determine your rating (which determines your price). Most insurance companies rate your insurability as follows...from best to worst:
- Preferred best, preferred, standard plus, standard
- Beyond the above there are Table ratings from 1-8
But an online quote engine can't ask you any questions. If you have more than one issue, they can't usually factor that in. They don't know which company will be best for your situation. They can't offer any advice. They have no experience. What to do? Simple....
You Don't Need an Insurance Agent
The best way to find out your likely rating is to spend a few minutes with an independent life insurance agent. They will have the experience and the tools to look at your situation and help you find the company that will look most favorably on your "issues". (And best of all, the insurance company pays them- there is no cost to you, and likely they will save you money. They will certainly save you time and energy!)
By the way, an agent can only give you their best estimate of what your rating will be. The insurance company is the only entity that can make you an offer of insurance. That will be after underwriting where they will have your application, your exam, your labs and perhaps your doctor records too.
What should you do if two agents give you different ratings and prices? I know you don't want to pay more than you have to...ask each agent why they chose that rating...that should give you some info. When you find out why one thinks your premium will be higher...find out why the other agent doesn't agree. Remember, the insurance company will give you the best offer they can.
All Insurance Companies are the Same
There are differences in term policies from company to company. We generally prefer the level term policies where the face amount and the premium remain the same for the entire term period. Here are some differences other than price...
- Each company has set rates based on your age and rating. They can differ from company to company by hundreds of dollars from low to high.
- Available riders- specifically the chronic illness rider(s) that only certain carriers offer. These riders allow you to use a percentage of the face amount to pay for medical bills if you have a chronic illness.
- Financial strength- you want a company that will be around when your family needs them to pay off.
- Conversion options- Generally a term policy can be converted to a permanent policy without underwriting for a period of time. Some companies offer better conversion policies than others. The time frames may differ as well. This option can be very important if you become uninsurable or would be highly rated (more expensive) once your policy is in force.
- Every company has slightly different underwriting guidelines. Applying to the right company can save you a significant amount of money over the life of your policy. (Paying just $20 per month more for a 20 year term would cost you $4800 at the end of the policy.) Independent agents have access to quote many more insurance companies than you can find yourself. Additionally, they will know which companies are financially strong.
The Bottom Line
Term life insurance for seniors can be a tricky situation. As you see, there are many things that influence the price of insurance, from your health to the company you choose. It's not always easy to find the best priced quality insurance. Be smart and find an independent life insurance agent with experience working with seniors. You and your family will be happy you did.