Life insurance provides financial protection to a person's loved ones in the event of that person's death. It pays a lump sum or continuous payments to the policyholder's beneficiaries upon the insured's death, providing their family financial security and peace of mind.
Buying a new life insurance policy can be confusing and overwhelming, even more so if you are a senior citizen. Factors such as age and health will impact the premium you pay or could cause you to be denied coverage.
Not all life insurance policies are the same and different life insurance carriers treat health and age factors in different ways. If you are planning to purchase life insurance as a senior citizen here are 4 things you must know before buying.
This article is written as general education, and should not be considered as personal financial advice. If you would like personal guidance with life insurance, you can schedule a time to talk with one of our experts.
#1 - Selecting the Best Carrier
There are many different life insurance carriers in the marketplace today and, just like in other industries, each life insurance carrier wants to differentiate themselves from their competition. This is especially evident when we look at underwriting, which is the process in which the insurance company decides whether they will offer you insurance, and at what price.
In this process, the life insurance company looks at factors like age, health, weight, height, occupation, avocation, finances, and more to determine your premium or to deny your coverage.
It is extremely important for senior citizens to be fully aware if they have an underwriting factor that could affect their underwriting classification and know which life insurance carriers would provide the best life insurance solution based on the specific situation.
#2 - Selecting the Right Policy Type
There are two primary life insurance policy types: permanent and term.
Term life insurance is generally only good for a specific period of time, commonly 10-30 years. Permanent life insurance usually lasts a lifetime.
Term life insurance is typically used to replace income or pay off large debts like a mortgage when an insured passes away. Many insurance carriers will only sell term insurance up to age 80. If you are older and in need of life insurance, your only option may be to purchase permanent life insurance.
Permanent life insurance is typically used to pay final expenses, estate taxes, or leave a legacy. There are many different types of permanent insurance including whole life, indexed universal life, universal life and variable universal life.
White Swan can help you find the carrier and policy type that is right for you. You can get started today through our online platform or by scheduling a call with one of our industry experts.
#3 - To Skip or Not to Skip Medical Exams
Many life insurance companies require a medical exam for approval; others may only have a series of questions the insured must answer. Determining which life insurance company may be right for you depends on your specific underwriting factors.
The medical exam helps life insurance companies determine the risk of insuring you. It allows them to more closely assess your overall health and determine if you are a suitable candidate for coverage. If you have a great health this could result in lower premiums or a higher cash value growth than a policy that only uses a series of questions.
Life insurance carriers that only use a series of questions and do not require medical exams may be best if you are moderately healthy or if your specific underwriting factors are viewed more favorably by these life carriers.
The most important thing to remember is that your specific underwriting factors are unique to you, so it is important to ensure that you choose the insurer, product, and process that provides the best results for you.
#3 - Life Insurance with Long Term Care or Chronic Illness Protection
The federal government estimates that 7 out of 10 people over the age of 65 will need long term care.
Life insurance carriers have added many different types of riders or product features that appeal to senior citizens, some of which have a benefit that can pay out in the event of a long term care or chronic illness event.
Some products may offer a lump sum or payments over time in the event of a long term care or chronic illness event. Payments are typically either indemnity (check sent, no questions asked) or reimbursement (submit your receipts and the company repays you). Some payments may be taxable and others may be free of ordinary federal income tax if there is a properly structured ownership and beneficiary arrangement. Some contracts may even qualify for a tax deduction. Speak with your tax advisor for specific tax advice.
It is important for seniors to understand that life insurance with a benefit for long term care or chronic illness is not the same as Long Term Care insurance. Typically, if the insured uses a long term care or chronic illness benefit on their life insurance, that will affect the amount that remains to be paid out upon the insured’s death. This means that coverage available for long term care may be limited to a portion of the original death benefit amount.
Senior citizens should be diligent in making sure they understand what they are buying, how it works, and what happens if they need to use the benefits their life insurance policies provide.
White Swan can review your existing life insurance and help you determine if there are better options available for you in the current market.
#4 - Consider Your Budget
Above all else, you must always consider your budget when deciding to purchase a new life insurance policy, because knowing how much you can afford and how much coverage you need is essential.
White Swan can help you calculate your life insurance needs.
Some life insurance carriers will offer discounts, or better prices, per every $1000 of life insurance death benefit if policy owners were to make lump sum or front-end loaded payments. This could save money in the long term when compared to paying a monthly premium for your entire lifetime.
Senior citizens who are looking to purchase life insurance must carefully consider which life insurance solution may be the best policy for their needs, underwriting factors, and budget.
White Swan has experts that can help senior citizens with life insurance plans. We offer comprehensive coverage with affordable rates and reasonable terms, by working with more than 25 top insurance carriers and using smart technology to make your experience more convenient. To get started, call us today at +1 (201) 479 2226, schedule an appointment with one of our industry experts, or request a personal plan through our online portal.