Life insurance can often be an after thought when we are planning for our financial future. Yet, just life retirement, there aren’t many ways to take action once the future arrives. When dealing with life insurance, once you pass the burden of responsibility gets transferred to your family. The good news is that planning for the inevitable is easier than accepting the inevitable.
Most people get hung up on two things. Cost and type of life insurance. We get the same questions all the time. What is the average life insurance cost per month? Which is better term or whole life insurance? Both of these questions lend themselves to vague answers that rarely lead to the one you want. The cost and types of life insurance are as varied as personalities. The better questions to ask are ones that relate to your circumstances and needs. Here are some example of needs and circumstances that will matter:
Your age will be one of the main factors you will be rated on. Life insurance rates by age of the insurance. Many people will get life insurance quotes online and will quickly learn that the early you get life insurance the better. The reason is simple. Life insurance can be construed as a gambling game. Gambling is based on odds. So, the younger you are the less likely you are to die. Lastly, some life insurance companies and plan types won’t accept individuals above a certain age. What age will vary by company and plan, but many will have a cut-off. We’ll cover seniors and life insurance in their own section further down.
Depending on your health conditions and history you may be denied or given a higher rate. This takes us back to our gambling metaphor. The more checkered your health history and/or the more chronic and/or medical conditions you have, the more likely you are to die earlier. Your body mass index (BMI Height/Weight tables)
Your reasons for getting life insurance will be the major factor that determines what kind of life insurance you get. Life insurance essentially breaks down into two types: Term and Permanent. There are many variants on these two types, but all will generally fall into one of these two groups. Term insurance is simply life insurance for a set amount of time. After that time is up the policy is over. Permanent policies last as long as premiums are paid monthly. These two types lend themselves to certain trends.
A term policy is often the cheaper option since it has an expiration date that isn’t directly tied to your death. Because of this many who want life insurance to protect their family until the kids are older or until certain bills are paid off (mortgage, ect.) will choose this option.
Permanent policies allow for guaranteed coverage when you pass (as long as you continue to pay your premiums). So, if your reason is to ensure your funeral and any other bills/items are taken care of after death then a permanent policy is for you.
Life insurance as an investment vehicle has become more popular over the years. There are plenty of competing philosophies on the legitimacy or way to go about this. I won’t get into the weeds of that here. For now, just know, that some permanent policies can be used as a meant to grow cash value tax free. That’s right, tax free. Money accrued through life insurance, either through the investment vehicle or the death benefit of life insurance is tax free. The most popular instance of using life insurance as an investment is the Gerber Baby life insurance policy. They did a great job of illustrating how getting life insurance for a baby can be a good way to invest and save money for their future by terminating the policy or converting it to something else when they become an adult. So if your reasons for getting life insurance is to have life insurance but get some investment value at the same time then a permanent life policy may be for you.
We’ve already alluded to this in the previous section, but the kind of life insurance and how much you get will be determined by your finances. Life insurance will be more expensive for the following reasons:
-Death benefit: The bigger the amount, the bigger the price.
-Policy Type: Term policies will be cheaper than a permanent policy with equal death benefits.
-Health: The healthier you are the cheaper the rates you can qualify for.
-Age: The older you are the higher the price.
So, depending on how much you are willing to spend monthly towards life insurance, your options will vary. This isn’t to scare you. Most people, even with less than perfect health and above years old can get a moderate amount of term life insurance for less than $50 a month. Now, if you’re looking for a million dollars of coverage in permanent policy you can expect to be paying potentially over $200 month or more depending on health and age.
Best Life Insurance Companies
In all things insurance everyone assumes there are certain companies that are the best and safe bets for whatever you choose. This isn’t exactly the case. Many of the big and/or reputable companies are certainly good. To say any certain company is the best is like saying which car company is the best. Each has their specialties and philosophies of how it should be done. Life insurance companies are the same. Each company has their certain flagship policies and a lineup that typically reflects the reasons they think life insurance serves. When finding the best company, it would be best to do your research and find out what kind of policy and how much life insurance you want. We recommend you take the time to find a broker that you trust. They’re expertise will come free for you since they won’t charge any extra fee for their services. A broker is an insurance agent that works with many different companies. They will be useful in helping you decide what plan is best for you and then finding a company that has the policy you are looking for. There are plenty of agents who aren’t brokers and who only sell one company. There is absolutely nothing wrong with them. We recommend that you know what you want and then seek them out to help you purchase and setup the policy you want. If you don’t know what you want, then you may only be presented with what they can offer.
Life Insurance Companies for Seniors
Since we primarily deal with seniors, we often get asked can elderly get life insurance? The short answer is yes. We will say that once you hit 70, your plan options will become limited as less companies and policy types may become unavailable to you. So, can a 70-year-old get life insurance? Yes. There are still options available. Many of the options available to seniors will have limits on the amount of life insurance. It won’t be uncommon to find many policies won’t allow you to get more than 20, 30, or 50 thousand in life insurance. So, how much is life insurance for a 70-year-old? Depending on the type of policy and amount, it can start around $50 a month for 5-10 thousand of life insurance and go up from there.
As far as which life insurance is best for seniors, it will often be a kind of permanent policy. Since the reason most seniors get insurance is to help for final expenses, you are going to want to be sure the policy is active when you pass. Most of the time only a 10-year term policy will be available for seniors. If you’re pretty certain you’ll be gone in that timeline or if you only have a temporary need for life insurance then this will work. For everyone else, you’ll want to get a permanent life insurance policy to ensure the policy is there to pay out when you pass.
What life insurance companies are best for seniors? My answer will be the same as above. Especially with seniors, there are plenty of companies that do only “final expense” policies. These are generally just a permanent policy with a small death benefit amount. Many funeral homes also offer these policies. To be honest, whether you get it from an agent, a broker, or the funeral home the policy will be similar. The only variant is that some funeral homes will allow you to just pre-finance a funeral with them and make payments on it. This is more of a loan installment plan that a life insurance policy. This isn’t a bad deal. Depending on your circumstances and how it compares to what life insurance policies available to you it may be a great deal and fill the need you have.
This decision can allow your family to grieve without the added burden of financial issues to follow your death. In short, this decision matters, so make sure it’s one that works for you and that you can commit to. Too many people get sold on a plan and cancel it in the first year. The company made some money and your family is back at risk for financial burdens if you pass.
If there is any big rule to take away for life insurance, it’s that earlier is better. If you are thinking of getting life insurance, don’t camp on the idea too long. Remember, as you get older and if your health declines your prices will increase. Since time is important, don’t worry about how much life insurance is going to cost. It can vary too much based on type, amount, and other factors. Start with what are your needs and what’s your budget. If not, you’ll likely get sold on something more than you need and way out of budget. There are a lot of options and philosophies happening in life insurance. The less you know about what you want, then the more you’ll be sold on what someone else believes. Find someone you trust as a broker or do your research and you’ll be fine.