As you get older, you may be asking yourself, what is the best life insurance after age 60? I am at that point in my life. I’m sixty-three, and a term life insurance policy that I have had for years is getting too expensive. I am a financial advisor too, and I have a sixty-four-year-old client in a similar situation. He has a twenty-year policy that I helped him buy nineteen years ago, and it is expiring within the following year.
My client and I both want to continue our life insurance, but mine is overpriced, and his is terminating. So if your life insurance is increasing in cost or ending, know that you are not alone. The good news is that there is a way to find the best life insurance after age 60. In this article, I will walk you through the process of how I kept my life insurance. And I want to share with you how I helped my client get new life insurance at age sixty-four.
Is your life insurance changing?
I bought my policy in 1992 before my wife had our first child. It is an annually renewable policy with a death benefit of $175,000. At the time, it was cheap at about $20 per month, and I can keep it until age 99. But there is one catch. It increases a little every year. So over the past twenty-nine years, it has risen bit by bit until now it is about $200 per month. Given that, I know I can find a better life insurance policy for that amount of money.
You’re not alone
The client that I mentioned has a similar problem but on a more significant policy. He bought a $1,500,000 life insurance policy with a fixed cost for twenty years. But, most importantly, within the following year, it will terminate. To that end, it has cost him about $2,700 per year, But he still wants life insurance protection.
Given that, how do you cope with aging and insurance? When you apply for new life insurance after 60, you must consider your health most of the time. That is unless you get a guaranteed issue policy, but that will not work in this circumstance. Guaranteed issue policies stop at about $100,000. And this client wants $1,500,000 in life insurance coverage.
A common problem
If you are sixty or older, you have probably had some health issue or are taking some prescribed medication. The Kaiser Family Foundation reported in 2019 that 75% of adults ages 50 to 64 were taking a prescription drug. And 9 out of 10 adults were taking prescribed medication as well.
When you are sixty or older, there is a common problem in shopping for life insurance. In truth, most of the advertised prices are for the 10% to 25% of adults that appear to be in perfect health and say they take no prescribed medication.
Frankly, the number of those who take prescribed medications should be higher—many people are prescribed medicine and don’t take them.
Given that, I have a relative that is a good example. She refuses to take her prescription medicine. And if you ask her if she takes any medications, she says no, she’s in perfect health. Well, that is not true. But it’s her choice. So she is one of those people that does not take prescribed medications and does have a health issue. Now there is a crucial point to my personal story.
How to get cheap life insurance
You can get the cheapest life insurance if you have perfect health. But, as you and I know, few people over sixty have perfect health. Everybody has a little something wrong. So when you see a life insurance price online, it does not consider your health situation. Everybody is unique.
But if most of the term life insurance prices online are wrong for seniors, how do you find the best life insurance after age 60? Price is important. Accordingly, it would be best if you have someone who can guide you. You need someone who understands life insurance and can find the appropriate type of policy at the best price. Without a doubt, if you have a life insurance need, I can be that guide. You can learn more about my practice and me at About – advice4lifeinsurance.com
My solution (& maybe yours)
Here is what I did for my insurance. My policy death benefit is $175,000, and I’m sixty-two. I want to keep the life insurance coverage for the rest of my life. However, the most extended-term life insurance I can get is through AIG for 25 years. Inasmuch, that insurance would last until the age of 87. And unless I know exactly when I will die, term life insurance will not work.
In weighing all of the options, a no-lapse guarantee universal life insurance is my best option.
The best life insurance for me (& perhaps you)
Everybody’s circumstance in life is different. And I try to not bring my own bias into advising clients. But from time to time I am asked what I do for my own life insurance. Without naming the names of insurers, this is what I look for when I am shopping for life insurance.
- Choosing a well-rated life insurance company is important. I expect to live a long time and want to buy from a life insurance company with excellent financial stability.
- Getting a good value for my money is important. So price matters.
- I want a policy to allow me to take part of the death benefit while living if I have a terminal illness.
- I want a policy that will withstand the ups and downs of the economy.
Why it’s the best
Here is why each of these points is important to me and should be important to you too. In the first place, life insurance ratings are essential. If you look at the ratings from companies like A.M. Best, S&P, Moody’s, and Weiss, you can get a good idea of how well they manage their business. Consequently, if they have low ratings, they may be taking a financial risk that may endanger their ability to stay in business in the future.
In the second place, reasonable pricing is a significant aspect of selecting a life insurance company. For example, I have a life insurance policy from one of the best-rated life insurance companies in the world. But the cost of the policy is becoming much higher than other similar companies. A key to switching at the age of sixty-two is qualifying regardless of pre-existing health conditions. But even if I had significantly poor health, there are life insurance companies priced better than the life insurance policy I currently have.
Be prepared for the unexpected
In the third place, I like the idea of accessing part of the death benefit if I contract a terminal illness. You may have heard advertisements for companies that will buy your life insurance policy. If someone needs cash and is dying, selling their life insurance before death can significantly help their finances. But know that the companies that buy life insurance policies of critically ill people are doing it to profit.
But what if you could access your policy death benefit and avoid the fee. Some life insurance companies will give policyholders a portion of their policies if they have a terminal illness. Even so, if you never need this benefit, it is worth having.
It’s not the 80’s anymore
To understand the importance of the last qualification, you need to know a little about people’s bad experiences with universal life insurance. In the 1980’s life insurance companies aggressively sold life insurance contracts that gave the flexibility of changing or even stopping premium payments. In addition, some insurance companies hedged their aggressive predictions of policy cash value increases by using non-guaranteed projections. Those were some of the first universal life insurance policies.
The bad and good
This is bad and good news about the development of universal life insurance. And the good news applies to what is going on now. But there is good reason to be hesitant about universal life insurance.
In the 1980s, insurance companies were earning double-digit rates of return from bonds. Bonds are the primary investment of insurance companies. Over the years, interest rates have dropped to where we are now. Nowadays, bonds are paying in the low single digits. Many people bought universal life insurance in the early years, expecting them to continue to deliver double-digit rates of return. However, the premiums were not guaranteed. Accordingly, if interest rates dropped, premiums would go up, and they did. Sometimes the premium increases were two or three times the original cost. As a result, many, many people dropped their policies. And those that kept them are still paying thousands of more dollars than they first expected.
How universal life insurance changed?
So, where is the good news in all of this? First, insurance companies have learned from the past and have developed new universal life insurance policies that work well in low-interest-rate environments.
The old policies had guarantees that were unsustainable. For example, it was common for interest rates to be guaranteed at 4% or 5%. New policies now have guarantees of only 2%. Again, you might think that higher is better, but in this instance, the lower guaranteed interest rate gives new customers a more realistic view of what to expect in the future.
The other development is that life insurance companies have added guarantees that the policies will not lapse or terminate as long as the premiums are paid.
I have been in the life insurance business for over thirty years. And I never sold a universal life insurance policy because I felt they were too unpredictable.
But with the new guarantees, I am comfortable buying a policy for myself.
However, I will add that if you have an interest in a universal life insurance policy, you will need to make decisions about what type of lapse guarantee you want. For example, you can get guarantees to age 90, 95, 100, or even older. Of course, the more extended guarantees are more expensive, but you have a realistic expectation of the cost and a choice.
It’s great that people live longer, but some seniors will need assistance with daily living activities, and they need some way to pay for it. In addition, one of the other changes to universal life has been the flexibility to add long-term care insurance. On the negative side, insurance companies had done a poor job of controlling the cost of long-term care insurance. On the positive side, the combination makes the cost of long-term care lower and more stable. Adding long-term care insurance is not a requirement of new universal life insurance policies, but it is beneficial.
One size does not fit all
As great as I feel that no-lapse guarantee universal life insurance is, it is not the best life Insurance after Age 60 for everyone.
Let’s talk for a moment about the sixty-four-year-old client that wants the $1,500,000 life insurance policy. He only wants life insurance until he reaches age 70, when he expects to retire.
Remember a moment ago when we were talking about the average health of those of us over sixty? Well, the sixty-four-year-old has had prostate cancer. But in his case, it is considered cured!
Regardless, life insurance companies are still going to consider him a higher risk than someone that has not had prostate cancer. Although, life insurance is still available for men that have recovered from prostate cancer. And it is available at a reasonable cost.
In this man’s circumstance, term life insurance is the better option. However, even though he only wants it for five years, five-year policies are not available for his age. So, his best alternative is to buy a ten-year term life insurance policy and cancel it after five years.
Let’s pause for a moment and clarify a few items to be sure you are clear on the references I am using. A ten-year term life insurance is a contract with a life insurance company guaranteed to last for ten years. The cost or premium is guaranteed to stay level for ten years as well. As long as premiums are paid, the insurance will remain in force for that time.
Since the gentleman only wants to keep the policy for five years, he can cancel the policy before year six begins.
Costs vary by circumstance
I haven’t discussed specific costs because they can differ for each person. For example, in my case, the medications I take are different from what you take. So the best place to start is to request a general quote and disclose all medications and health issues.
For my company, Advice4LifeInsurance.com, we take that information to several life insurance companies before filing a formal application. That way, we do not have the possibility of creating adverse information.
Here is what I mean when I say negative information. Every time someone fills out a life insurance application and submits it to a life insurance company, the data creates a trail. The reason is that every life insurance company participates in privately sharing client information. Every life insurance company does it, so it is impossible to avoid.
When I fill out a life insurance application, my information is filed with a non-profit company called the MIB (Medical Information Bureau). And if I decide to apply for another policy concurrently, all the other companies will have access to my information. As a result, if I apply for life insurance from two companies simultaneously, they may consider that I am trying to double my coverage. Or they may take my actions as if I am trying to pit one insurance company against the other. In that case, one or both of them may decline to offer coverage because they perceive that I am trying to deceive one or both of them.
What is the best life insurance after age 60?
So that is why the best approach is to communicate with the life insurance companies on an informal basis at the outset. Describe the medications, health, and other relevant information to get their opinion on how they would treat someone like you. In conclusion, then formally apply to the company that has the best informal offer.
If this information has been helpful and you are looking for the best life insurance after age 60, send me an email at firstname.lastname@example.org. Or, you can get a general idea of the best life insurance after age 60 options available by going to Advice4LifeInsurance.com and completing the online request for a quote.