Like almost any consumer product, life insurance can be designed to benefit any portion of the population. In the senior market it is especially important to be confident that the coverage you are purchasing can fulfill your goals.
Many people are covered by a group life insurance plan through their employer. They often don’t have coverage outside of work. When you change companies, you can often “port” your insurance to an individual policy. Unfortunately, most insureds do not realize that they premiums will increase substantially every five years. In effect, this makes it extremely difficult for the insured to keep the policy in force at the time it is most needed. Additionally, you can often purchase a policy through an independent life insurance agent for less money than your ported policy. (This depends on your health, but the savvy consumer will check before accepting a ported policy.)
We tell our clients to have their primary insurance coverage as an individual policy. They can purchase a policy where the premium never changes. This is available as term or permanent coverage. This allows you to keep the coverage when you most need it!
Another portion of the senior marketplace for life insurance is those companies that offer coverage through an association or another group, where membership is necessary to purchase coverage. Most of these offers come in the mail or are advertised on the internet, television, and radio. The problem with much of this coverage is price. The organization only contracts with one insurance company so there is no competition to keep rates reasonable.
Also, many of these carriers offer products that in hindsight, should never have been purchased in the first place. I often receive calls from people whose policy ends at age 80. While this might have been acceptable many years ago, higher life expectancies have hurt those who have been paying premiums for many years only to find their coverage has lapsed in later life, and their ability to buy new coverage severely limited.
Were you a smoker? If you have quit the nicotine habit recently, you may be able to lower your life insurance premiums substantially. Many carriers will allow “non-smoker” rates after as little as 12 months free from nicotine. That means no cigarettes or nicotine patches for 12 months. Even if you still smoke occasional cigars, chew tobacco or use snuff you may qualify for “non-smoker” rates under certain circumstances.
For seniors, this is especially important as the difference between smoking and not smoking rates is substantial, and the premium difference increases year-by-year as you age. In fact, at age 65 smoker premiums are almost double those of non-smokers because of the difference in life expectancy.
Of course, the big differences between premiums are the result of age and age-related illnesses. For seniors that have experienced cancer or heart disease, premiums may be higher if coverage is available at all. In these situations, it’ best to make sure that the coverage you currently have in force stays in force. If the cost is unreasonable, consider lowering the face amount to make it more affordable.
Finally, a note about internet life insurance quote engines. Because life insurance is a relatively easy concept to understand, many potential applicants think that they are getting the best offer by choosing the least costly premium in any comparison of carriers.
While this might often be true, consumers are unaware that carriers can and do consider health information differently when underwriting a case. In my experience, when “shopping” a case with several carriers it is common to receive different health categories despite having identical information on which they base their analysis.
Also, there are many riders and other benefits that some policies have, while others may not offer them, or offer them at a higher cost.
Not only do underwriters view cases differently, but many carriers also have “sweet spots” which can give special consideration to applicants with specific health issues. While no consumer would be expected to know how underwriting works, a good independent life agent will have this information at his fingertips.
One thing to remember is never cancel a policy until the replacement policy is placed in force. This way you can be sure you are always covered.
It’s always a good idea to ask questions of your agent, but the best question might be “Is there anything out there that might represent a better value?” If you’re not certain if your policy is a good deal, call an independent life insurance agent to find out.
Lenny Robbins has been in financial services for his entire business carrier. He specializes in life insurance for baby boomers and seniors at LifeNet Insurance Solutions.
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