In your 70's - Life Insurance Recommendations

AARP life insurance simply much more expensive

June 14, 2013

12:00 PM

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10 year term, 2013, 66 years old, 67 years old, full underwriting, guaranteed acceptance Whole Life, guaranteed issue whole life, guaranteed universal life, In your 50's, In your 60's, In your 70's, life insurance quotes, no blood test, No Lapse Guaranteed Universal Life, no physical exam, Permanent Life Insurance, preferred rate, Simplified issue whole life, standard non tobacco rates, Term Life Insurance, Underwriting, universal life policies with secondary guarantees, whole life vs. universal life

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I first posted about AARP’s high priced life insurance program two years ago. Has there been any reform to that profit mill taking advantage of seniors? No. AARP member options are only among the most expensive.

AARP now promotes “The AARP Life Insurance From New York Life” on a separate website. It’s “exclusively for AARP members.” Their mission statement: “To help make it simpler for AARP members to apply for affordable life insurance protection, AARP selected New York Life to provide a life insurance program just for its members.” (italics mine)

simple = more expensive

The AARP New York Life insurance web page has three choices, all of them no physical exam, i.e. paramed exam. Simple. Higher priced simplicity.

Are you in good, average or even slightly below average health? Focus on fully underwritten life insurance requiring a paramed exam. It’s free, at home or wherever you choose at your convenience, takes about 20 minutes and saves you a considerable amount of money.

Best value in rapidly descending order:

full underwriting: paramed exam
simplified issue: no paramed exam
guaranteed issue: no health questions

Unsure if qualified for fully underwritten coverage? Find out. You’d be surprised. Type 2 diabetics with good control can get standard rates. Always check first before applying. Even if a simplified issue product is advisable, shop around for the lowest prices. There are much better deals than those offered through AARP.

Doubly more expensive permanent

For example, $25,000 permanent coverage female 66 years old, monthly premiums

$70.00 Transamerica at preferred non-tobacco, GUL*, age 121
$74.00 Transamerica at standard non-tobacco, GUL*, age 121
$127.52 AARP Life Insurance program from New York Life, age 121

Why would an organization, supposedly acting in its members best interest, not promote fully underwritten life insurance options? How about: ease of issue, faster turn around, lower labor costs, higher premiums, higher profits.

Term: At your age?

Term is to replace lost income or to cover a debt like a mortgage. If there is a shorter duration need, term life insurance might be suitable, but generally retirees should get permanent life insurance for estate planning and final expenses, not term. Outlive the term period, and there’s zero benefit. If for some reason term is needed, get fully underwritten coverage. No physical exam term is much more expensive. The AARP program term rates are five-year age bands: e.g., 65-69, 70-74. Tiered rate term insurance is an inferior product and much more expensive. Level premium term is the best. The rate is the same for the entire term period.

Please contact me for a free and confidential quote. Many more options available.

Licensed Agent: Sean Drummey
phone: (910) 328-0447
email: spdrummey@gmail.com

* Guaranteed Universal Life (GUL), also called no-lapse Guaranteed Universal Life, look for lifetime no-lapse guarantee level premium to age 120 or age 121; three major life carriers have GUL products starting at $25,000.

Product and carrier details:
Transamerica Life Insurance Company: “TransACE”
Genworth Life Insurance Company: “Colony Term”

quotes 6/14/2013, rates subject to change

Levon Helm and the risk factors for throat cancer

by Sean Drummey

April 20, 2012

4:46 PM

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Age 58, Age 71, In your 50's, In your 70's

Levon Helm died yesterday, April 19th, of throat cancer at age 71. He was diagnosed in 1998, the year he turned 58, and during that time had 28 radiation treatments that helped give him over a decade more to live. Before his diagnosis he was reportedly a heavy smoker, a many as three packs a day.

It’s wonderful that modern medicine gave them those extra years. Alarm bells should go off for oral sex as a risk factor as well as tobacco.

Who are at risk?
– Big time smokers
– Alcohol users
– People with poor diet
– People with HPV
– People who are actively pursuing oral sex
– Genes
– Those who were repeatedly exposed to asbestos
– Those with GERD and human herpesvirus

As a music fan, I did see Levon Helm perform with The Band at Watkins Glen in the summer of 1973. So many people were there, over 600,000, seeing isn’t really the right word. We could see the stage at a distance, so it was more a background listening experience through the crowd noise. I played some of The Band’s songs as a disc jockey at Colby College in Maine from 1974-1976, but not much because most of their best songs were from the ’60’s, and my focus was on newer releases. I didn’t care for their 1975 Northern Lights – Southern Cross. I remember being annoyed listening to “The Night They Drove Old Dixie Down” on the radio, especially Joan Biaz’s cover in 1971 which became a hit and got a good deal of radio airplay. Any ballad gets a tedious after repeated air plays, especially a cover. I never bothered to buy any of their records, or back catalog as I did many of my favorites when CD’s became established, but The Band were certainly an enjoyable and essential part of that era’s music. The opening lyrics to “The Weight” sometimes rolls through my head.

I pulled into Nazareth, was feelin’ about half past dead;
I just need some place where I can lay my head.
“Hey, mister, can you tell me where a man might find a bed?”
He just grinned and shook my hand, and “No!”, was all he said.

(Chorus:)
Take a load off Anny, take a load for free;
Take a load off Anny, And (and) (and) you can put the load right on me.

Life insurance after a major health problem: Modified Whole Life

by Sean Drummey

December 28, 2011

1:52 PM

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beneficiary, Burial insurance, burial insurance, burial insurance with guaranteed life policy, final expense, Graded Benefit whole life, guaranteed acceptance Whole Life, guaranteed issue whole life, In your 70's, Liberty Bankers Life, Modified whole life, no blood test, no exam, no exam life insurance, senior final expense, Simplified issue whole life, Underwriting, Whole Life, whole life insurance

Final Expense Options
Individuals, mostly seniors, looking for final expense coverage have four choices. Their desirability is in descending order:

fully underwritten Guaranteed Universal Life (GUL)
simplified issue whole life
modified benefit whole life
guaranteed issue whole life, also called graded death benefit whole life

Regrettably, profit and volume driven marketers, including AARP, not acting in their client’s best interest, skip over option #1 to concentrate on the easier to write and faster to place options #2, #3 and #4.

Look for
Option # 1, Guaranteed Universal Life starting at $25,000 in coverage is very cost effective coverage. Full and immediate benefit. Fully underwritten, it requires a blood tests and carriers usually review 5 years of medical records. Applications take on average 6 weeks and require from the agent and brokerage good old fashioned time and expense, and have a lower placement ratio. That’s why certain marketing organizations, including direct mail, phone and mail solicitations, don’t want to get bogged down doing them, even though it’s in the client’s best interest.

Plan B
Option #2, Simplified Issue Whole Life, is full and immediate benefit, comes into play for affordability, smaller policies $3,000 to $8,000. Also the underwriting is less strict, no blood test or medical records, usually only MIB * check and prescription drug check, and helps with coverage if a serious condition occurred two or more years ago. Remember a $25,000 Guaranteed Universal Life cost about as much as a $10,000 whole life, so make sure to consider option # 1 before settling on option # 2. See here ages 60 to 69 whole life quotes. See here ages 70 to 70 whole life quotes.

Option #3 Suitable for those who have had a major health problem but having occurred over two years ago.

Option # 4 No health questions. Basically, all one needs is be cognitively and physically able to sign the application.

Modified Benefit Whole Life
The beneficiary receives a percentage of the death benefit in the first few coverage years. The percentage rises and generally by the 4th year there is a full benefit.

Guaranteed Issue Whole Life also called Graded Benefit Whole Life
No health questions. Coverage is characterized by a waiting period for the full life insurance benefit. The waiting period is typically 2 or 3 years. If the insured dies during this waiting period, the beneficiary receives a return of premium plus interest, typically 5% or 10%. After the waiting period, it’s the full death benefit. The application question are limited, and coverage is not available only if the individual has a terminal condition or bedridden.

This doesn’t sounds bad, if you’ve had recently something like cancer or a heart attack and really need coverage. What’s the catch? Well, Modified Whole Life is relatively expensive. One of the best ways to judge this coverage is to divide premiums into the death benefit to see at what point cumulative premiums exceeds death benefit. For example with Liberty Bankers Life a 71 year old female.

$99.88 monthly for $10,000 Face Amount – Modified Whole Life

Years 1 – 3 benefit equals return of premium plus 10%
Year 4 death benefit 100%
Year 5 death benefit 105%
Year 6 and thereafter 110% benefit

In this example, Year 6 and thereafter a 110% of face amount is an $11,000 death benefit. Annual premium is $1,198.56 ($99.88 x 12)

$11,000 / $1,198.55 = 9.2 years. Thus, cumulative premiums exceed the death benefit after a little over 9 years.

Whether or not this is a good value depends on the individual’s health condition and life expectancy. In the example above: will this 71 year old live into her 80’s? If she does, the owner ends up paying more in premiums than receiving in benefit.

Please contact me for a free and confidential quote.

Licensed agent: Sean Drummey
phone: (910) 328-0447
Email: spdrummey@gmail.com

(* MIB Medical Information Board, checks prior life insurance applications)

Revised: 8/22/14

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Long Term Care coverage: how long?

by Sean Drummey

December 6, 2011

11:23 AM

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Accelerated Death Benefits, Alzheimer's, Chronic Illness Rider, dementia, In your 70's, life insurance and long term care, long term care diagnosis, long term care insurance

After reviewing life insurance/long term care hybrid coverage options, the question comes down how much LTC coverage is sufficient? There are two separate questions: how much you’ll need, and how long will you’ll need it. The best reference source on cost is Genworth’s annual cost of care survey.

For length of time, here are national statistics complied by a Montana LTC guide:

36% stay less than 1 year

32.5% stay less 1 – 3 years

14% stay from 3 to 5 years

17% stay 5 years or longer

Continue reading “Long Term Care coverage: how long?” →

Universal Life vs guaranteed UL what works best depends on age

by Sean Drummey

October 12, 2011

2:53 PM

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Age 68, Cash Value, Estate Planning, guaranteed universal life, In your 40's, In your 50's, In your 60's, In your 70's, In your 80's, Universal Life

Universal Life, UL, has many different life insurance product designations. One of the most basic distinctions is whether it is a UL or a Guaranteed UL.

Guaranteed Universal Life (Guaranteed UL)
With guaranteed UL there is a lapse protection guarantee: as long as you pay your premium on time, coverage is guaranteed. Lifetime guaranteed UL is guaranteed to age 121. Great coverage: inexpensive, straightforward, easy to understand. Put premium payments on bank draft and forget about it. Is there a catch? No. Well, perhaps in a few ways: guaranteed UL’s lack flexibility on the adjusting the premium amount, the lapse protection is lost if the premium is not paid on time, and guaranteed UL’s do not build much cash value.

Universal Life (UL)
UL’s are called flexible adjustable life insurance for a reason. Premiums are flexible. There is a target premium. The real target is to make the life insurance coverage last for the rest of the policy holder’s life. Premium can be raised, lowered or kept the same to meet that target. It’s sort of like gas in the car. The idea is to have enough gas (cash value) to reach one’s destination, i.e. go beyond the person’s lifespan. At the policy’s beginning, target premium is typically set to age 100. The car’s (i.e. carrier) performance helps determine how much gas (premium) is needed. With a UL the holder is obliged to take a much more active role in management of the policy.

Does my age affect which type I choose?
Yes, generally select a UL in 40’s and 50’s, and a guaranteed UL in 60’s, 70’s and 80’s

Universal Life: 40’s and 50’s
When younger, in your 40’s or 50’s, you want the flexibility of regular universal life to lower or raise premium payments depending on your financial situation, to build higher cash value and to possibly replace your coverage for a better product later on.

For example:

Mrs. Wright, age 46, takes out a $250,000 universal life policy with the target premium of $150 a month. Five years later, her child needs braces and her monthly budget is tight. Since there is $3,000 cash value in her policy, Mrs. Wright, after reviewing an in force illustration, lowers her premium to $100 a month. One year later after getting back on better financial footing, Mrs. Wright increases her premium to $200 a month until the policy back on track to the original target of age 100. Later she is able to lower the premium back down to $150 a month.

Guaranteed UL: 60’s, 70’s and 80’s

When older, lock in a benefit amount for a set premium for life.

For example:

Mr. Ward, age 68, would like to leave $500,000 to his son. He chooses a guaranteed universal life product because the premiums are fixed and the policy is guaranteed to age 121. He has a secure retirement income and can well afford a fixed premium payment. He puts those payments on bank draft and can rest assured that this portion of his estate plan is secure.

Life insurance to pay off a reverse mortgage

by Sean Drummey

October 11, 2011

9:55 AM

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Age 62, Age 73, guaranteed universal life, In your 60's, In your 70's, Indexed Survivorship Universal Life, Joint survivor guaranteed universal life, Survivorship Life Insurance, Survivorship Universal Life

First let’s assume a homeowner does adequate research including taking a long hard look at the disadvantages and alternatives decides a reverse mortgage appropriate for their situation. Granted, many homeowners will need every penny of this money, but some may desire to tap into home equity for discretionary funds and have broader goals. For example, those who want an heir to keep the house, life insurance is a means to pay off the reverse mortgage’s loan balance.

For those in average or better than average health, life insurance is readily available in one’s 60’s, 70’s, and even 80’s. For joint policies only one of a couple needs to be healthy to qualify; the other can be uninsurable.

There are two forms of life insurance: term and permanent. Term level premium ends in 10, 15 or 20 years, so in generally term is not suitable to cover a reverse mortgage’s lifetime commitment. For permanent there is whole life and universal life, which comes in many forms. The best product to cover a reverse mortgages is guaranteed universal life. It’s fixed rate and coverage for life, usually to age 121. All the policyholder has to do to is pay the premiums on time. Couples can get joint coverage, also known as second to die coverage, with a joint survivor guaranteed UL. How much does a guaranteed UL cost? There are sample rates by age on the right hand side for individuals. Please contact me for your own personalized quote. Here’s an example.

Mr. and Mrs. Jones, both 73 and in good health, needs funds for retirement but want to leave their lakeside home to their daughter, so they decide upon a reverse mortgage. They qualify for a lump sum payment of $250,000. They take out a $350,000 joint survivor life insurance policy so their daughter may pay back interest and principal on the loan, and also as a contingency against declining home value. A $350,000 joint survivor guaranteed UL with Prudential is $650.00 a month, at the preferred non tobacco rate.

If this couple were in average health, this Prudential joint coverage is $887.00 a month at the standard rate. To show you how joint policies compare to individual, using this example a $350,000 individual policy for a woman is $768.38 a month with Lincoln National and $1,009.23 a month for a 73 year old man with Banner Life.

Keep in mind the heirs can be the owners and beneficiaries of life insurance policy and pay a portion or all of the premiums.

Turning 70

by Sean Drummey

September 23, 2011

4:07 PM

Financial planners may be wrong on life insurance

by Sean Drummey

September 22, 2011

12:15 PM

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Age 55, Age 70, guaranteed universal life, In your 50's, In your 60's, In your 70's, Policy Review, Universal Life

Do you have a life insurance policy purchased in the 1980’s or 90’s? It’s time for an independent review. Do not necessarily expect the agent or financial planner that sold it to you to give you objective recommendations on its status. I reviewed a policy this week where a financial planner gave years of bad advice and continued to do so, even as the policy projected to go off the cliff. A financial planner may be unqualified, too busy or lack the financial incentive in revamping your life insurance coverage. Here’s what you should recognize if you bought a policy in that era:

Do not assume the policy is whole life. Generally, they are universal life (UL). There’s a big difference.

Continue reading “Financial planners may be wrong on life insurance” →

Small permanent life insurance in your 60’s and 70’s

by Sean Drummey

August 8, 2011

2:42 PM

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Age 68, guaranteed universal life, In your 60's, In your 70's, Whole Life

Looking for a smaller life insurance policy for final expenses? What’s best? It depends on how much coverage you need.

American General Life recently sent agents and brokers a notice that they were lowering their prices on the whole life product, called American Elite Whole Life. They had pretty good prices already, so I looked into it. For example, a $10,000 whole life policy with American General for a female 68 non tobacco is $48.20 a month. That beats Liberty Bankers Life $51.97 a month. Both are “non par” or non participating whole life: no dividends and so the face amount is level; it will always be a $10,000 benefit. American General has paid up insurance. That’s a plus if you decide to stop paying premiums. You would have the option to surrender the policy for its cash value or keep a smaller paid up policy. For example, after 10 years this 68 year old female would have the option of taking $2,330 in cash value or keeping $3,918 in paid up insurance. American General however requires full underwriting, meaning a blood test and possibly a review of medical records, for people over 55. Liberty Bankers life is simplified issue, no blood test.

In contrast a $25,000 guaranteed universal life policy with North American is $47.68 a month at their best rate, $50.26 at preferred non tobacco and $64.03 at standard non tobacco. This required full underwriting: blood test and usually medical records.

$25,000 of coverage for $50.26 a month or $10,000 for $48.20 a month? Easy choice. You pay about the same for a $25,000 guaranteed UL as a $10,000 whole life. Both offer permanent life insurance coverage at a fixed rate. American General’s whole life only real advantage is if you terminated the policy. You have the choice of the guaranteed cash surrender value or reduced paid up coverage. North American guaranteed UL builds little or no cash value, but if you pay on time the coverage is guaranteed to age 120. Guaranteed Universal Life is a better deal.

What if all you need is something like $5,000 or $8,000 in coverage? Let’s use female age 68 non smoker again as an example. For $5,000 it’s $24.10 a month with American General and $28.22 with Liberty Bankers Life. For $8,000 it’s $38.56 with American General and $42.57 a month with Liberty Bankers Life. American General is less expensive. It would depend on your individual health situation, because American General requires more underwriting. Regardless, look to whole life for coverage amounts less than $10,000.

Face amounts as low as $5,000, $1,000 for term conversions.

8/8/2011, quotes , non tobacco, rates subject to change, quote accuracy or completeness not guaranteed

image source: Wikimedia commons

Term vs. Permanent it’s all a matter of age

by Sean Drummey

July 29, 2011

11:43 AM

Leave a comment on Term vs. Permanent it’s all a matter of age

Below Average Health: Substandard, Impaired Risk, Estate Planning, Final expenses, guaranteed universal life, In Your 20's or 30's, In your 40's, In your 50's, In your 60's, In your 70's, In your 80's, Term Life Insurance

Should one choose term or permanent life insurance? Granted every situation is different, but a general guideline is simple. Go by the age you need to cover.

Term before retirement and permanent after retirement – Term to replace a breadwinner’s lost income: permanent for final expenses or estate planning.

Term – pre-retirement

20’s: 30 year term
30’s: 30 year term
40’s: 20 or 25 year term
50’s: 10 or 15 year term
60’s: 10 year term

7 to 10 times annual salary is general rule of thumb. Most important: get something with affordable premiums. If need be, drop back on the term length, rather than the face amount, for affordability.

If you have children, get term long enough to cover your youngest child past college age. For example, if your youngest is 9, a 15 year term. 9 + 15 = age 24. It used to be that age 22 was the benchmark year for college graduation, but since the 5 year plan is more the norm, so you may want stretch it out a bit more.

Permanent – post-retirement: 60’s, 70’s, 80’s, 90’s

Ideally, start a separate permanent policy in your 30’s, 40’s or 50’s. If not, permanent is available into one’s 80’s. If unhealthy, you can convert your term policy into permanent in your 60’s.

First choice: fully underwritten life insurance, which requires a blood test and medical records. It’s less expensive, and you get more coverage. There’s a big industry out there, including AARP, that misleads seniors into needlessly expensive no exam term and permanent. That coverage is only plan B if very unhealthy and for permanent only. Don’t be fooled into no exam term.

North American currently has the best policy for final expenses, a $25,000 guaranteed universal life.

For estate planning purposes there are guaranteed universal life policies at whatever coverage level that suits your objectives. The most choices are for coverage at $100,000 or more. Please refer to my sample quotes by age.

Images: Wikimedia Commons