Seniors looking for life insurance coverage are using the internet to do their research just as others do for a variety of purchases. However, most sites do nothing except show quotes from different carriers without any sense of where this coverage fits in a total plan. This article will show you how to look at so-called “final expense life insurance” and how to navigate these sometimes-treacherous waters.
First, seniors looking for life insurance have 2 major categories to investigate. There are “simplified issue” policies and fully underwritten coverage. Let’s discuss each with its pros and cons.
Simplified issue coverage is sold by about a dozen carriers, a few of which are rated A+ by AM Best, the life insurance rating agency. They require no paramedic exam or blood and urine testing and are generally fast to get approval assuming no negative answers to the health questions. While more expensive generally than other types, this coverage offers death benefits from $2,000 to $40,000. In addition, for those applicants that cannot qualify for immediate coverage, they may be able to offer “graded benefits” which means the coverage will be accidental death only for the first 2-3 years, followed by full benefits thereafter.
Simplified issue policies also may offer coverage for those that are declined for fully underwritten policies because questions on the application are more concerned with current medical issues. While some questions ask if you EVER had the following, most questions start with “during the last 2 years, or during the last 4 years”. This may enable you to qualify for either immediate or graded benefits.
For those interested in larger amounts of coverage starting at $25,000 a fully underwritten policy is recommended. Even if you can qualify for simplified issue, you will find policies that require a paramedic exam will be substantially less expensive dollar for dollar. For example, a recent review of larger policies shows savings of 50% or more in premium cost vs. simplified issue at “standard non-tobacco” rates. Those people that can qualify for a better health rating will enjoy even greater savings.
Now that you have an idea of what’s available, let talk about what you can do to keep your premium as low as possible. Premiums are determined by your health, lifestyle and age. Unfortunately, there’s not much to be done about age, although your choices about policies starts to be limited over 80 years old.
Smoking. If you’re a senior and still smoke, stop. At older ages the difference between premiums for smokers vs. non-smokers is large and continues to grow the older you are. Believe it or not, insurance companies will give you “non-smoker” rates after just 12 months free of nicotine. If you needed another reason to stop the habit, this is it.
Weight. If you’re overweight it’s a good idea to check with your agent before applying. You may find your weight is acceptable, or find that a couple of pounds can make a difference in health rating on fully underwritten policies. In fact, the number one and number two criteria for premium cost is age and build.
Finally, make sure to use an independent agent to assist you in finding the best policy for you. I did a survey recently of both types of policies and found that the most expensive policies were more than double the cost of the least expensive. So, perhaps the most important thing to remember is that comparison shopping for life insurance makes sense no matter your age or your health.
Today, the internet provides so much information that it can be overwhelming no matter what you’re searching for. Wouldn’t it be easier to talk with someone experienced in all facets of life insurance?
Think about your objective. What amount of coverage do you need and for how long. Normally seniors are looking for permanent polices that will stay in force for their lifetime. Seniors should not consider the purchase of term insurance unless their purpose in doing so involves protection for only a specified period, and not lifetime coverage.
One final thought. Don’t be afraid of asking for help. If you have family members that can assist you, have an agent speak with them as well. If you’re looking for life insurance for seniors from LifeNet Insurance Solutions, please get in touch. You can never have too much information.