As you get older, it becomes tougher to get a life insurance. The reason why it is harder to get a senior life insurance is that all life insurance is based on two factors. Factor number one is health status. Factor number two is age. As you grow older, your life expectancy becomes shorter and shorter. And with increasing age, you are more likely to be ill. Those are just simple facts of life and make senior life insurance tougher to get. However, there are plenty of options even if time and health are not in your favor.
Throughout your life you have two basic life insurance options. You can buy permanent or temporary coverage. Permanent coverage is offered by two different products. First, you can have a whole life policy, which has a cash building aspect. You can find out more about it here. Second option is to get a universal policy. Universal policies offer permanent coverage without a significant cash value aspect. This makes their premiums lot lower.
Temporary insurance is called term insurance. It is a straight coverage, for a predefined term, with zero cash aspect. Click here for more info. Once the term is up, coverage expires, and no money gets paid out. The only way to extend the coverage is to renew the policy, but any renewal will base your new premiums on age and health status. While being the cheapest, even this form of senior life insurance can get pricey.
Senior Life Insurance Options
If you purchased a policy when you were young, then you have more flexibility now. With increasing age and health issues it becomes more difficult for you to get a policy. Especially in terms of price.
One of the options you can explore after the age of 55 is a 401(k) rollover. It is not a type of life insurance per se, but it is a beneficial method to obtain one. At the age of 59½ you are eligible to withdraw your 401(k). Using this money to purchase a whole life policy will continue to grow your money tax deferred, plus gives you a death benefit.
Whole Life Policy
This policy offers you permanent coverage, but premiums are the highest. If you can afford them, it is the way to go. We already mentioned one way to fund it above. The plus is the establishment of an instant estate. Of course all policies provide this, but with whole life, it is especially significant. Reason is that your coverage does not expire, your money grows, and no matter how much you pay into it, 100% of the face value is available from day 1 in the form of death benefit. Any future cash value growth adds to the death benefit. Something you will not get with any other financial product.
This is a pretty simple, yet complicated permanent solution. You have numerous types of universal life policies to choose from. Some offer a little cash or surrender value, but that’s not their main selling point. The best thing about universal policies is the combination of price and permanent benefit. If you have a tight budget and looking to cover a need, then this is definitely an option you must explore.
When you hit your 60s, term life premiums start really rising. This type of policy is best used as a bridge towards something. You should use it to either to cover an immediate need, or to secure insurability with a later conversion. The biggest drawback is the term. After the term expires, all money paid for premiums is lost.
Guaranteed Issue Policy
This type of policy generally provides coverage for final expenses. It is a policy that does not require any underwriting, no medical exams. It’s rules are simple. You cannot be terminally ill, you must be able to work and unlike the policy types above, it does not start on the day you sign the contract. For example, the one we offer here, its coverage starts 12 months after the month you pay your first premium. While policies mentioned above will not be issued to you if you have Diabetes, Cancer or heart issues, guaranteed issue policies disregard these conditions. This is why there is the 12 month period before coverage starts.
Annuity with Death Benefit Rider
If you are uninsurable, you can also take advantage of an annuity with a death benefit rider. This rider makes sure your beneficiaries will get the value of the annuity in case you should pass away. Annuity is not life insurance, but it is an alternative to regular life insurance offered by insurers.
Let’s get personal
This article presents you with several options. Which senior life insurance is best for you? Impossible to know without knowing your personal situation. Let’s start a discussion and let us help you assess, which option is the right one for you. Fill out our form here and we’ll get back to you shortly with some ideas, which will allow us to further discuss your options and preferences.