Category: In your 70’s

Life insurance bundled with long term care and critical illness

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June 16, 2011

11:32 AM

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Accelerated Benefit, Accelerated Benefits, Accelerated Death Benefits, Alzheimer's, Chronic Illness Rider, Critical Illness, In your 50's, In your 60's, In your 70's, life insurance and long term care, Living Benefits, long term care insurance, long term care plans, Universal Life

Life insurance can now fund long term care or critical care expenses. Turn your death benefit into a living benefit. American National now offers an impressive group of accelerated benefit riders at no extra charge.

There are three living benefits:

  • Chronic   –  Payment of an accelerated benefit if the insured cannot perform 2 of 6 activities of daily living or cognitively impaired. This is the criteria for long term care insurance benefits with traditional LTC plans.   Use your life insurance to augment your LTC insurance, cash comes in handier than expense reimbursement, or have your life policy serve as your contingent LTC insurance.
  • Critical   –  Payment of an accelerated benefit if the insured experiences a critical illness. American National says 16 different illness, but details and definitions must be referred to on the specific rider
  • Terminal  –  Payment of an accelerated benefit  if insured has less than 24 months to live. Most life insurance coverage has this terminal illness rider.   It’s 12 months in certain states.

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Couple considers life insurance as estate plan for children

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June 6, 2011

3:56 PM

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Age 69, Age 70, In your 60's, In your 70's, Survivorship Life Insurance, Survivorship Universal Life

A couple nearly 70 years old and in good health asked a newspaper financial columnist if it was too good to be true that a $200,000 life insurance policy could provide an $800,000 tax free benefit for their children.

Well, $800,000 sounds like a bit of a stretch, especially if you want to play it safe with a guaranteed policy.  Hovever, the general concept is valid.

They are talking here about a survivorship universal life policy, called a SUL or second-to-die.   And they’re probably talking about the $200,000 as a single pay, one single lump sum payment with no further premiums.    The columnist gave a fairly good answer, and warned about guaranteed and non guaranteed elements.   Well, that’s a traditional SUL, and to get anywhere near $800k with a $200k single pay, you’d have to look at a SUL.

There is also Guaranteed SUL, of G-SUL.  The benefit won’t be as high, but it’s guaranteed to age 120, so you don’t have to worry about the policy’s performance or outliving your policy.

Here’s what a Guaranteed SUL looks life for someone in “good” health.  Two rate classes, preferred and Non-Smoker Plus, with Prudential are health rates that mean good.  Prudential is generally the strongest carrier right now for G-SUL, but you would have to compare rate given the couple’s health factors.

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Permanent life insurance more suitable for seniors than term

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June 6, 2011

12:50 PM

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Age 60, Age 61, Age 62, Age 63, Age 65, Age 66, Age 67, Age 68, Age 69, Age 70, Age 71, Age 72, In your 70's, In your 80's, Product

Over the last few days, I compared life insurance websites for seniors in ages 60 through age 72 by Google searching life insurance and adding an age, “life insurance age 68”  for example.   It’s misleading for those in their 60’s and 70’s to see at the top of Google’s list websites with term life insurance given such prominence. Term is not usually the right product for seniors.  The primary purposes of term are to replace lost income or settle an outstanding debt like a mortgage.   Sure if you have less than 10 years to go on a mortgage, term life insurance might make sense.   I would surmise term gets promoted and sold simple because it’s less expensive.  But if one buys term in your 60’s or 70’s, chances are you will outlive your term, and then you’ve paid all that premium for nothing.  Even if you take the best term out there, Genworth, and have the option to convert to a fixed rate universal life, you have to pay higher premiums as your age goes up.

For the majority of people in their 60’s and 70’s permanent life insurance is the most suitable coverage.  If at all healthy, guaranteed universal life insurance is the best.  Coverage starts at a $25,000 benefit amount, and premiums are affordable.  North American has an excellent G-UL right now.   There are also small whole life policies, called simplified issue because there is only a short questionnaire and no blood term.  Coverage starts at a $2,000 a $3,000 benefit amount.   Either choice is better than term because it’s fixed rate coverage for life.

 

Woman buying most life insurance plus long-term care insurance

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June 1, 2011

1:41 PM

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Accelerated Benefit, Accelerated Benefits, Accelerated Death Benefits, Chronic Illness Rider, guaranteed universal life, In your 50's, In your 60's, In your 70's, life insurance and long term care, Living Benefits, long term care insurance, long term care plans, Universal Life

Woman buy 60% of the life insurance plus long-term care insurance policies, according  to research by the American Association for Long-Term Care Insurance.  34% of the woman were between 55 to 64, and 40% were between ages 65 to 74.

North American has the best deal for life plus chronic illness benefit.   It’s a universal life policy that can accelerate out 24% a year in cash for chronic illness.   End up not needing long term care?   Your beneficiaries get the full policy face amount or whatever you haven’t accelerated out for long term care.    Also North American policy face amounts start at $25,000 of coverage, so premiums can fit any budget.

For larger face amounts there are single premium policies with Genworth and Lincoln National that offer many advantages such as return of premium.  There are also annuities that offer long term care riders which extend long term care coverage 2 or 3 times higher than the  face amount.

Guaranteed Issue Life Insurance

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May 19, 2011

3:18 PM

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Alzheimer's, Below Average Health: Substandard, Impaired Risk, In your 60's, In your 70's, Product, Whole Life

Those late night commercials or mailbox solicitations for life insurance that say, “You can’t be turned down”  are talking about graded benefit life insurance, also called guaranteed issue life insurance.   There are no medical questions, no medical exams.   The applicant must be mentally competent and be able to sign their own application.   There is graded benefit term and graded benefit whole life.   Eligible ages are generally from  40 to 80, with some variations depending on the carrier.  Benefit amounts generally run from $2,000 up to $50,000.

One can be on death’s door with cancer, heart disease or AIDS and get this kind of life insurance.  Alzheimer’s, however, you cannot. The catch is that you must wait 2 or 3 years to get the full benefit.   If one passes away before then, other than by accident, premiums are returned plus interest.   Criteria for judging competing carriers are the premium, the waiting period, and interest rate on return of premium.

Is it a good deal, or at least an okay deal?   Presidential Life Insurance Company, a longtime seller of guaranteed issue whole life,  made the news this week by showing a profit in the 1st quarter.   There are other carriers, but Presidential is usually come up on any short list, so I’ll use them to give a sample quote.

Age 65

Monthly Premium Face  Amount Waiting Period Return of Premium interest rate Carrier Graded Benefit Whole Life
$90.21 $10,000 2 years 5% Presidential After 2 year waiting period full benefit

 

So that comes to $1,082.50 annualized a year for coverage for a $10,000 benefit.    Remember that’s the monthly bank draft rate.  It’s $1,002.30 a year if you pay it annually.  As usual, paying annually is a better deal.   Not hard to do in your head math on this one, but let’s see how it figures out exactly: $10,000 benefit divided by $1,082.50 annualized premium equals 9.2 years  (10,000 ÷ 1,082.50 = 9.23)

So it’s value as a coverage depends on one’s situation and life expectancy.  Since there’s return of premium, you can’t lose on someone passing away in a short period of time, you get your money back plus interest.   However for someone who lives a relatively long time, despite poor health, may end up paying more premium than their policy is worth.

 

 

 

 


Whole Life is better under age 40

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May 16, 2011

4:40 PM

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In Your 20's or 30's, In your 60's, In your 70's, Universal Life, Whole Life

I was running $100,000 permanent life insurance quotes today for a woman in her late 30’s.   I quoted MassMutual for whole life.    Premiums for guaranteed universal life with PennMutal were about half as much.   But I recommended whole life even though it was more.  Being  under 40 the quality of whole life is worth the extra price.

With a participating whole life’s dividends like MassMutual,  the face amount increases over the years: $101,000, $102,000, etc.   There is also paid up insurance.  Whole life has guaranteed cash value and dividends will increase the cash value higher.   Over time the policy holder will have many options as those dividends and cash value increases to vary their premiums.

With the guaranteed universal life it’s a fixed course.  The face amount remains level.  $100,000 all the way.  That’s my biggest concern with setting a level face amount too in one 30’s.  What will $100,000 be worth 40 to 50 years from now?   The payments are level but if you miss a couple of payments, changing banks or whatever, you may rescue the universal life with the cash value, but the lifetime guarantee is broken.

Granted with a universal life (UL) you can opt to structure it with an increasing face amount and to endow, worth it’s cash value, just like a whole life. But it’s not guaranteed to do so like whole life.  When you add whole life type features into a UL, the premium rises so close to a whole life you might as well go for the real thing.  That is when you’re in your 20’s or 30’s.

Now when you’re in your 60’s or 70’s it’s a different story.   You don’t have time to build up cash value in a whole life and the premiums are much higher.  A guaranteed UL is better.

AARP life insurance poor choices

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May 11, 2011

11:11 AM

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graded benefit whole life, Graded Benefit whole life, guaranteed acceptance Whole Life, guaranteed issue whole life, In your 60's, In your 70's, In your 80's, non par whole life, Product, Simplified issue whole life, Whole Life

AARP life insurance choices are flawed and will tend to be more expensive.  When you go to AARP’s website for life insurance, all the options say “No Physical Exam”. That’s more expensive coverage. Actually you want to take a “physical”, called a paramedical exam, even if you’re in your 70’s or 80’s.  It’s free, they come to your door, takes about 20 minutes and can save you lots of money.   Here’s the proper order of choices for life insurance as a senior.

#1 option

Fully underwritten life insurance.   Applications require a blood test and short paramedical exam.   Carriers generally request your medical records, all at no charge to you.  This way life underwriters can gage your risk classification and make you an offer for coverage.   This will save you lots money over a no physical exam policy.  Genworth and North American offer lifetime guaranteed permanent coverage, called no lapse universal life, starting at a $25,000 benefit, Penn Mutual starts at $50,000, and multiple carriers, including Lincoln National and Aviva, offer coverage of $100,000 and more for seniors.   Unless you’re in really, really poor health, try this first.  There is no cost to you to apply, and the worst they can do is offer you a higher rate or turn you down.

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Annual Statement: Review and Save Thousands

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May 6, 2011

12:08 PM

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In your 60's, In your 70's, Policy Review

I was reviewing an annual report for one of my life insurance clients this morning.  Agents are cc’d a copy, and I make it a point on the policy anniversary to contact my clients.  This policy is guaranteed universal life (G-UL) policy, also called a no-lapse guaranteed UL.  As long as the premium is paid on time,  the policy’s benefit is guaranteed. This one is guaranteed out to age 120 and is on bank draft, so it’s on auto pilot and in that sense the annual report is not that important.

But there is one key element worth considering: the policy’s cash value.   This policy has a $25,000 level benefit.   The cash value is building up towards $2,000.    Since it’s a level benefit, when the policyholder passes away the beneficiaries only get the $25,000 face amount.   Any cash value remaining in the policy disappears.

So what good is the cash value?    There are several ways it may come into play: Continue reading “Annual Statement: Review and Save Thousands” →

Survivor Universal Life Uses

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March 23, 2011

11:55 AM

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In your 60's, In your 70's, Product, Universal Life

A couple for estate planning purposes may create one life insurance policy that pays out when the last surviving person passes away.   The product used for this is called a SUL or Survivor Universal Life.  To lock down the death benefit, a lifetime guarantee is usually part of the coverage, so look for the the letter G in the mix, as in SUL-G.  It is less expensive to have a joint policy as a couple than two separate individual policies.   Also you qualify for coverage even if one of you is uninsurable or in poor health.   It’s uses are generally:

 

  • Estate Taxes

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