If your a senior looking for elderly term insurance you know how hard something like this can be. In fact if you read my previous article on how to buy elderly life insurance you will learn the exact steps you need to take to buy life insurance for seniors properly. However in this article I’m going to cover ten tips you can apply to this process to save some big bucks on your life insurance.
The first thing any elderly person should do is buy early. The truth is life insurance gets a lot more expensive as you get older. Their is also an increased likely hood that you face some sort of health related risk as well which could also drive the cost up as well.
A perfect example I have of this is when I was working financial services I had a client who was interested in buying some life insurance. So I ran them a few quotes and ended up finding two term policies that were less than $20 a month each. However the client decided that they just didn’t have the money right at that time so they decided to wait.
A few month later she ended up having a stroke. Luckily she survived but this also meant that any chances of her getting a life insurance policy went out the window. This is why it’s so important to buy early.
Stick With Term
Secondly, being in your older years you will want to stick with term insurance for elderly people. The reason for this is because term is much cheaper than cash value policies such as variable, universal life, and whole life.
In fact the the cost difference can be staggering. While I was working in financial services every time I would show a client the difference between term and cash value life insurance they would be blown away as to how much the cash value policy cost. In fact is the typical cash value policy would start out at $50 a month while a term policy would start at around $20 to $30 a month. If you would like to learn more read my article on why term life insurance for the elderly is the best.
Go With A Lower Death Benefit
Now that we know term is a much better option than cash value life insurance another thing you can do is look into lowering your death benefit. This might seem odd but the reality is that a lot of people who have life insurance are carrying way to much.
In fact I came across a guy once who had a million dollar term life insurance policy. However he didn’t have any debts, he didn’t have a family, in fact he still lived at home with his parents. When I asked him why he had this big of a policy he said that’s what his father told him he should have.
Instead get what you need, cover things like funeral cost, debt balances, and even the loss of a bread winner but if you don’t need the extra coverage don’t buy it.
Go With A Lower Term Rate
Next, the great thing about term life insurance for elderly people is that you don’t have to own it forever. Unlike cash value policies like whole life you own them till the day you die as long as you keep paying. With term insurance it allows you to pick how long you want to have the coverage.
In fact the typical term policies will range from as short as 5 years to as long as 30 years. The benefit of this is that shorter term polices will cost less with the same amount of coverage than a 30 year term with same amount of coverage.
Meaning if you had a $100,000 five year term policy it would cost far less than a $100,000 30 year term policy.
When it comes to buying senior term life insurance one of the easiest things you can do is shop around, and I’m not just talking about calling your local insurance agent. Instead I recommend you call several agents in your area. On top of that look into online options as well. Do a search for term life insurance companies and you will come up with tons of companies that will be able to runs quotes and shop the market for you.
In fact I once had a client who had been with the same company for nearly 20 years and the reason she stuck with them was because that’s what her parents said that they were the best. However when I showed them several different quotes from competing companies they finally realized how much money they were overpaying on their old policy. I guess it can be said it pays to shop around.
Cash In Your Permanent Policy
The sixth thing you can do to cut down your life insurance cost as a senior is to cash in your permanent life insurance policy. Since we know a term policy can be much cheaper than a permanent policy like a whole life policy why not cash it out and use the money inside the cash value to pay the premiums for a term policy.
However I should warn you before you consider this option that you will want to qualify for your new policy before you dump your old one. If you happen to be unable to qualify for a new one you won’t have any coverage at all.
Keep An Eye On The Fees
The next thing you can do to save some money on your life insurance is to watch the fees. Most term policies will hold fixed payments. However some policies fees will fluctuate. This is why it’s very important that you get an illustration when shopping around for life insurance.
An illustration will show you exactly how much you will pay each and every year, and how much your fees will be. If you notice your premium going up it may be a good idea to shop around and see if their is a cheaper deal out there for you.
Return Of Premium Rider
The next option is to look into a rider. A rider is an add on to a policy, in this tip though the return of premium rider. This is a rider that pays you back on the premium you’ve paid into your term policy minus any extra health related cost and the cost of any riders you use on the policy.
The benefit of this option is that you can get most of the money you put into the policy back to either use for other things like paying down debts, saving for retirement, or even taking out another term policy to make payments with. To learn about this option read my article on return of premium life insurance.
Merge All Policies Into One
Ninth, often times when I would first show up at a clients home one of the first things they would show me is all the life insurance policies that they currently have. I commend them for have life insurance but the problem is having several policies can be very costly.
Instead combine all those policies into one policy per person. The reason this is more cost effective is because when you buy life insurance their is always going to be a base fee you’re going to have to pay, but if you have several policies you will in a sense be paying this fee several times over. By merging all of your life insurance into one big policy you only pay this once.
Look Into A Term Rider
Finally, the last tip is to look into a term rider. The benefit of a term rider is that it will usually cost a lot less. With most policies you will usually have what is known as base coverage. Base coverage is usually more expensive. However with the addition of a term rider for additional coverage it can be much cheaper.
The other benefit is that you can drop this coverage at any time if you don’t need it anymore to help you save on cost. For example if you have 15 years to pay on your mortgage you could add a term rider to cover the additional balance of your mortgage and once the mortgage is paid off you can drop it to save some money.
Do you have a comment or question? Can you apply some of these tips to use or do you have a tip of your own to save some big bucks on elderly term insurance. If so feel free to leave a comment or ask a question below.