Buying life insurance for the elderly people can be a bit a challenge when you have no place of reference to start from. This can lead to making wrong or bad decisions that could cost you some big bucks down the road. So in this article I’m going to walk you through a 5 step process of buying elderly life insurance.
Step 1: Why Do You Need Life Insurance
When your a senior buying life insurance for the elderly, such as yourself, shouldn’t even be thought. By now you should be debt free and the only expenses you should be paying right now are the normal living expenses and taxes. However this isn’t a perfect world and you may still need life insurance.
First off, you need to consider the real reasons you need life insurance at your age before you buy. To prove my point I once talked to life insurance agent who told me a little more life insurance could never hurt. This may be true but just because some life insurance agent claims it might be better for you consider why you would really need in the first place.
If you have no debts, and extra money in the bank their may be no need to have extra life insurance but on the other hand if you have 10 years to pay on your mortgage yet, your credit cards are loaded to the max and you have no extra money to spare in your bank accounts this may be a great reason to have a life insurance policy at your age.
So take the time right now and list the reasons you need a life insurance policy.
Step 2: What Is Your Current Physical Condition
You need to consider your current physical condition. Your physical condition has everything to do with how much coverage you can get, and what type of policy you can get. This is where things like age, physical disabilities, and diseases you may have such as diabetes, heart problems, or even cancer.
However just because you have one of these problem does not mean that you can’t get a policy to fit your needs. While working in financial services I’ve seen people who have suffered congestive heart failure get coverage, so don’t count yourself out yet.
In this step you need to consider what is physically holding you back. Take the time write those down now.
Step 3: How Much Life Insurance Do You Need
Once we’ve considered why you need life insurance and your current physical conditions you need to figure out how much you should need. This is a very important number for you to know, why you might be asking?
The reason you want to know how much life insurance you need is because at older ages life insurance becomes more expensive, on top of that the cost of life insurance is charged per $1000. For example if ever thousand dollars cost $2.47 and some agent recommends you get $100,000 of coverage this could add up in a hurry if you purchase way to much coverage.
So how much coverage do you need? The first thing you need to consider is funeral expenses. This typically will run around $15,000 when you consider the casket, vault, and services altogether. Next consider what kind of debt that you have. If you have credit card debt, a car loan or a mortgage you will want to figure balances of each of these debts into your death benefit amount.
Here is an example to help you out. First off start out with a death benefit of $15,000 to cover funeral expenses, on top of that if you still have a $15000 balance on your mortgage add this as well. Finally, you also have a car loan of $5000. This means you should have death benefit of $35,000 altogether.
Take the time to figure out what kind of coverage you need now.
Step 4: Choose A Life Insurance Program That Fits
Now that we know how much coverage you need we need to find a program out there that fits your needs. Unfortunately, this can be harder than you think with so many different options out there. Some options are really good options while others should never be considered.
- Variable Life Insurance. Variable life insurance is a cash value life policy that invest the money into the stock market through sub accounts within the policy. This kind of policy should be avoided when considering the elderly simply because variable option is much to risky and may result in a lose of funds.
- Whole Life And Universal Life Insurance. Whole life is also a cash value life insurance policy however the cash value account is not invested in stocks and bonds but rather in fixed investments where money can’t be lost. This type of policy is good for those who would like something permanent and the payments will stay fixed as long as you continue to make your premium payments. If you would like to learn more about this option check out my article on Whole Life Insurance Explained.
- Term Life Insurance. The next option is term insurance. These policies are meant to cover you for a specific amount of time. These policies typically range from 5 years to as long as 30 years. The benefit of this type of policy is to cover you for a specific length of time after which you should no longer need the coverage. For example if you have ten years to pay on your mortgage a 10 year term policy could be the perfect solution since it will cover you until the mortgage is paid off and can be a much cheaper solution than a whole life or universal policy.
- Guaranteed Acceptance Life Insurance. Next you need to consider guaranteed acceptance life such as that offered through the AARP. This is a program that can give you as much $15000 in coverage and the best part is that you can’t be turned down. This policy is great for those who have poor health conditions and can’t qualify for a traditional policy. However one downside you should know about is that these policies will come with two year rule that says if you die from natural causes in the first two years you will receive a deprecated amount of the death benefit. To learn more read my article on guaranteed acceptance life insurance.
- High Risk Life Policies. However before you consider a guaranteed life policy you may want to look into a high risk policy, also know as impaired risk life insurance. These are companies that take on specific health related risk. The benefit of these companies is that they can allow someone who needs more life insurance than a guaranteed acceptance life policy can offer. To learn more check out this list of 5 high risk life insurance companies that may be able to help you out.
- Save Up. The final option you may want to consider is none of the above, you heard me. Sometimes it may be better not to get a life insurance policy. Consider this, let’s say it cost you $150 a month for a $15,000 guaranteed acceptance policy. Instead of sticking that money towards a policy like this, start your own life insurance fund and save the money in a separate savings account or certificate of deposit at your local bank. This way you will have the money when you need it and you won’t even have to qualify for it. This account should be set up as a joint with right of survivor that way your spouse can access the account to cover funeral cost.
Now that I’ve covered several options here take the time to pick the option that works best for your situation.
Step 5: Get Quotes
I know what your thinking getting life insurance quotes are about as dull as reading the dictionary but it is a necessary step. The great thing about getting life insurance quotes is that they’re free, so why not get as many as you can?
I once got a call from an insurance agent who wanted to run some quotes by me and I said sure. After I told my wife of the situation she complained it was just a waist of time but the reality is he may be able to offer us a better deal and that’s why it’s important to shop around.
Take the time to get at least 10 different quotes before you make a final decision. You never know who’s going to have the best option.
Do you have questions or comments about buying elderly life insurance, please submit them below.