How do you choose the right life insurance policy if you’re a senior?
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Why Seniors May Need Life Insurance
There are many reasons why people age 65 and older need life insurance. We help guide you through your choices.
The best type of life insurance policy for seniors is the policy that does what you wanted it to do.
Final Expenses for Seniors
Final expense life insurance policies offer coverage amounts up to $25,000.
The smaller policies are designed for people age 65 or older.
These no-exam life insurance policies are easy to qualify for and can be finalized in about a week.
Drawbacks of guaranteed acceptance policies are the price (expensive) and graded benefits (during the first few years).
If you have health issues, final expense may be the best option.
If you’re healthy, you may qualify for a better policy by going through underwriting.
Mortgages for Seniors
Every year, more seniors age 65 or older are looking for life insurance to cover a mortgage.
If you have debt, term life insurance is a great option.
Life insurers offer level term life insurance up to age 80!
For ages 85 – 99, you can buy a 1 year term life insurance policy that is not renewable.
If you’re still working and need to replace that income if you die, a life insurance policy will do that for you.
Again, a term life insurance policy may address your needs while you’re working.
You may also be behind on your retirement plans and need to have a policy that will definitely pay a death benefit.
In this case, whole life insurance or universal life insurance policies are the best options to consider.
Something to consider is how your death benefit will pay out.
While the lump sum death benefit option is the most common, you have other choices that may be worth consideration.
Other life insurance settlement options include a life income option, fixed payments over a period of time, etc.
If you have a pension, you probably have a choice of benefits.
A maximum benefit for you, but nothing for your spouse if you die,
You may choose a reduced benefit that would continue paying to your spouse.
To maximize your pension, you can take the greater pension benefit now and buy life insurance to cover the loss if you die.
Legacy planning provides a death benefit larger than the assets you would have otherwise left to beneficiaries.
For instance if you have money set aside for your offspring or grandchildren.
Instead of leaving money for them, you purchase a life insurance policy with that money.
The life insurance policy would then provide a death benefit greater than the money you would have left.
You can assign a life insurance policy to a trust, and set up the terms of the trust to pay your beneficiaries according to your wishes.
Universal life or whole life insurance policy are the types to consider for legacy planning.
Legacy planning has great potential, but there are also pitfalls if not carefully planned.
It’s important to only work with policies that are fully guaranteed.
The reason why is to ensure that the policy works as intended.
Life insurance is an important tool for estate planning.
If you have a multi-million dollar estate, life insurance is used to offset estate taxes.
But estate planning is also commonly used by small business owners.
If one of your kids wants the business, but the other kids aren’t interested in the business, life insurance is perfect.
Many times, the type of life insurance for this situation will be a survivorship universal life insurance policy.
A life insurance policy can provide a benefit to the other kids so that they receive an equal inheritance from you.
What to Expect from Underwriting
When it comes to life insurance underwriting, some policies require full underwriting and a paramed exam.
Other life insurance policies are guaranteed acceptance life insurance policies.
Some people assume incorrectly that if they have a health problem, a guaranteed issue policy is the only option.
But, many times we are able to provide better options through underwriting.
A number of life insurance companies have introduced cognitive screening as part of the underwriting process.
The tests are for proposed insureds aged 70 or older.
You may be asked to complete one of these tests.
The examiners will not help you with the test, but will tell you to read the directions and complete the test.
Cognitive Tests Used by Life Insurers
Landmark Drawing Copy Test – The medical examiner will give you a sheet of paper that will have a picture of a clock.
The time will be indicated on the clock.
The examiner will ask you to draw the clock on a separate piece of paper.
Trail Marking Test – With this test, you will be handed a piece of paper.
On this piece of paper you will see a bunch of circles with numbers or letters inside the circle.
You will be asked to draw a continuous line without lifting up your pencil, to connect the circles in order 1,2,3,4,etc.. or A,B,C,D.
For some life insurance companies, you will be asked to connect numbers to letters in order.
For example, A,1,B,2,C,3,D,4, etc..
The object is to draw a continous line from circle to circle until complete.
Delayed Word Recall Test – With this test, the examiner will show you 10 words on a flash card.
The examiner will ask you to use each word in a sentence.
Then they will have you repeat the 10 words in sentences again.
Later on, during your paramed exam, the examiner will ask you to recall as many of the 10 words as you can.
Most life insurance companies will want you to take a brief paramed exam at the very minimum.
Companies are looking to see if the senior has any evidence of cognitive impairments.
You must be able to perform all activities of daily living, otherwise only guaranteed acceptance is available.
Your age and the amount of life insurance coverage determine the paramed exam requirements.
We’ll tell you upfront what the exam requirements are.
Life insurance is available for seniors.
Once we know why you want life insurance, we’ll show you the options available and explain the pros and cons.
We’ll then help you find the best-priced life insurance policy that meets your needs.
At RiskQuoter.com our service is a no pressure, no obligation service.
Michael Horbal is the founder and owner of RiskQuoter.com and a licensed life insurance agent who has helped thousands with affordable protection for families and businesses.