Life Insurance for Seniors

One of the first things you have to decide is if term insurance is right for you or a permanent policy would better fit your needs. This is where you need to think about what you want to accomplish with this insurance coverage. Basically, do you need coverage for a limited time period or would coverage for your lifetime do a better job?

The goals(s) you want to achieve with life coverage will help determine which type of policy is the best choice for you. Here are some goals better met with a term policy:

• You have a loan or debt (or mortgage) you wish to allow your family or business to pay off should you pass away.
• If you can't afford permanent coverage, term coverage is certainly better than no coverage. Also, most term life policies are convertible into permanent policies for a specified period of time. (If you want permanent coverage and can't quite afford it now, you may purchase a term policy with good conversion options and plan to switch when you are ready. Obviously, you would discuss this with your agent so they can explain exactly how conversion works and why you should choose one company vs. another!) 

There are different types of term life insurance.

Our usual go to policy is level term life insurance. In  level term life insurance for seniors, the death benefit and the premium both remain the same for the entire period of the term policy. After the level term period expires, the premium will increase dramatically, because the insurance carrier is basing their risk on you living during that specific term period. Often the premium difference at the end of the level term period is staggering.  It will continue to increase annually. If you still need coverage you would have to apply for a new policy. You would be at 10 to 20 years older than when you purchased this policy and your new coverage will naturally be more expensive. 

There are some level term policies with chronic care and critical care riders built into the contract. Although they are slightly more expensive than level term policies without the riders, the additional value they provide may make the extra premium well worth it. If you are diagnosed with certain illnesses and meet the care requirements, you can borrow out of the policy to fund your care. (This loan will reduce the face amount payable to your beneficiary. There are fees associated with the loan.) If you don't have long term care coverage, this can help you during a difficult time. This is not a replacement for long term care coverage, but it can be a great benefit to you and your family.

Decreasing term insurance is generally not a great deal, because the premium will remain the same, but the face amount will lower over time. This type of coverage is often referred to as mortgage coverage and is usually more expensive than level term policies. We would use a level term policy to protect a mortgage. The beneficiary is usually your spouse, and as the mortgage decreases, your spouses face amount grows.

Renewable term life insurance has a level death benefit however the premium increases annually. This may be the least expensive coverage if you need coverage for a short period of time. But if you are not certain how short the time period will be, a traditional level term policy protects you for a longer time with a level premium.

There are return of premium term policies. Just like it sounds, after the level term period you would receive all of you premium payments back. You get the most money returned if you keep the policy to the "end", with some companies offering partial refunds for a few number of years prior.

Which policy is right for you? Talk to your life insurance agent for advice on the best way to achieve your goals and get the most value from your life insurance.

Here are some goals that are better accomplished with a permanent (or lifetime) policy:

• You want to leave money for your final expenses and any debts.
• You want to protect your spouse who would not be able to live comfortably without your income.
• You have a special needs child or grandchild and you want to leave money for their care.
• You want to leave money to care for a spouse who needs home health care.
• You want to leave money for a family member you help support, who would have financial difficulties without your assistance.
• Your want to use insurance for estate planning.
• You want to continue your charitable giving.
• You want to protect a business that would fail without you.
• You have some other financial need that will follow you throughout your lifetime.

There are many types of permanent life insurance available.Many of these life insurance policies are flexible and can be structured to meet your needs. 

• Guaranteed Universal Life can be set up with level premiums for life. You can choose to accrue cash value or not. You can pay the policy in full in one payment or over a number of years. These policies offer a level or an increasing death benefit. If you don't choose to accrue cash value and you choose a level death benefit, this will usually be the least expensive type of permanent coverage you can purchase. Many different insurers have these policies.
• Survivorship Universal Life Insurance insures two people, usually a husband and wife, and pays one death benefit after both are deceased. It is an excellent choice for high-net worth applicants. It can be used to supply cash for the cost of settling your estate (probate or taxes), to pay off business or personal debts, to equalize the estate among your heirs, and more. It is usually less expensive than two separate policies. An uninsurable applicant may be able to coverage through a survivorship policy.
• Indexed Universal Life Insurance credits your interest based on a percentage change of an index in a given year. Typical index crediting methods have an upside cap and a downside floor. The actual percent change on the upside is typically capped at 9-12% with a floor on the downside of typically 0%. These policies offer a level death benefit or an increasing death benefit. 
• Variable Universal Life Insurance is a security and must be sold by a registered representative. 
• Whole Life Insurance is another type of permanent coverage available. There are several types of whole life insurance. We think whole life insurance is the best option for smaller face amounts of final expense life insurance. If you are looking for a policy in the $2,000 to $40,000 face amount range this type of policy is often a good choice. Final expense policies have simplified underwriting, so there is no medical exam or blood test required. These policies can be in force in a number of days (rather than weeks with a fully underwritten policy).
• Guaranteed Issue Life Insurance is a type of whole life insurance. As the name suggests, there are no requirements to purchase this coverage. There is a two year (or three year) waiting period before the full face amount is paid. Accidental death is paid for in the first two years (so long as there is no medical condition involved). This coverage is only available up to and including age 85.

Whatever type of permanent coverage you decide is right for you, you will need to work with an agent. Choose an independent life insurance agent as they will have many carriers available to look at. Every company has different underwriting guidelines they follow. By placing your application with the right company the first time you save time and have your coverage in place faster.

How much insurance do you need?  We find that many of our clients have some idea of how much coverage they want. If they are unsure we can work backwards,  starting with the amount of monthly premium someone wants to spend, and we will tell them how much insurance that is likely to purchase. 

We can help you know how much insurance you qualify to buy (there are financial guidelines from each insurance company). We will work with you to find an amount of insurance that you are comfortable with, that makes sense for your situation, and that is affordable.

The amount of insurance you choose to get will help determine the company(s) we look at. If you are getting a small final expense policy, we have a group of companies we use. If you are looking for a larger policy, then we have another list of carriers. Although there is overlap, what type of policy determines where we look. The quote engines are separate, but both give us many choices to provide you the best value. 

As experienced agents in the senior market, we know what to look for and what to ask you as we prepare to get your quote(s). There are often many issues to consider when quoting senior life insurance .  The older we get, the more medical issues there tend to be.  Underwriting may be more complex when there are multiple issues and multiple medications. Experience working with seniors and life insurance is very helpful. Here's why:

• We know which carriers look more favorably on certain medical conditions. This can be the difference between an approval and a decline (especially when purchasing final expense insurance).
• We have in-house independent underwriters to assist us with the more complex cases.  Their experience working directly with the carriers and their underwriters puts them in the unique position of knowing the insurance company's preferences best. They can have a conversation with the carrier underwriter if there is a need. Most agents do not have the ability to discuss a case with the carrier underwriter.
• Together we can direct you to the carrier that will look most favorably on your personal situation.
• We work with many different, highly rated companies. This gives you access to a wide range of policies with different underwriting guidelines. Underwriting guidelines differ from company to company, so you may be declined from one carrier, but another may offer coverage at a reasonable premium. One large drawback of a captive agent is that they have only one carrier available for you. 
• In certain cases our underwriter can request informal quotes from multiple carriers giving us vital information about where you should consider applying.
• We may have our in-house underwriter assist with your case from the initial quoting to discussing your file with the insurance carrier underwriter. Sometimes that can make the difference in getting your policy to be affordable for you.

AM Best is an independent company that rates insurance companies. We only use companies that are rated A+ down to A-. This helps us write your insurance with a financially stable carrier.