The Importance of Life Insurance for Seniors.

You may think that at your time in life you either : (i) Don’t need life insurance, (ii) Will not be able to afford it. or (iii) You are too old.

Why do you need life insurance ?

Life Insurance will help your family at a time of great stress, emotion, and to be honest, funerals today are not cheap and your family will be left with the bill if you do not have adequate life insurance. Any outstanding debts will become payable, this is especially relevant if you are responsible for the payments on your home.

You may also wish to leave your family a small nest egg, or reserve so that they can continue comfortably when you are gone. This is not essential, and may be irrelevant if your family are all grown and have families of their own however if you have little saving it may make sense to take out a life insurance policy to cover off last expenses, also if you have a young family and they still rely on you for various expenses having a policy that not only pays off the bills, but also leaves an amount in the bank may be the choice for you.

Can I get life insurance ?

In most cases yes, however there is an age limit usually 80 or younger. if you do not exceed the age limit there is an insurance policy out there that will suit you. Life Insurance plans are quite common for seniors, and varied, so finding a good broker to give you the best advice is a good starting step to finding your life insurance policy.

Do I have to pay the policy premiums ?

If your situation is such that you cannot afford the premiums for your life insurance plan, maybe your adult children could help. It’s becoming common place for  adult children to pay the premiums for their elderly parents, giving the children peace of mind knowing that the expenses on death will be covered by a life insurance policy.

Whatever your situation, if you don’t have life insurance and do have a family then you are best advised to look into life insurance options, for your own peace of mind, and that of your family’s.

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Top 10 myths about Life Insurance

You must have Life Insurance.

You are not legally required to have life insurance, if you choose not to – that is entirely up to you. Most people take out life insurance to guarantee that in the event of their death their beneficiaries are not burdened with the costs associated with a death.

I am not married and don’t have kids – I don’t need it.

See above. Just because you owe no credit, and have no direct beneficiaries doesn’t mean you shouldn’t get life insurance. Think about who is going to pay for your funeral, and other costs that will be associated with your death. A small policy will cover these.

The amount of Life Insurance is dependent on Income.

This is a popular myth, cited by many companies when discussing a suitable policy. The amount of insurance you require has nothing to do with your salary, it has to do with how much would be required to pay off your debts (bank loans, mortgages, income replacment etc) in the event of your death. The choice to make sure that your family is left with a comfortable amount to live on after your passing is up to you.

I should get a Term Policy.

This depends on your needs – If you want the policy to be a guarantee for a loan or mortgage then Term may be right for you. However if you require that the policy be part of an investment portfolio or estate plan then Term Policies are not for you.

Once I have purchased it – I can forget about it.

A lot of people think this – they leave college, get a job, buy a house and sign up for a Life Insurance policy. Then never think about it again. This is a mistake, things in your life change – marriage, having children etc…

I quit smoking since I purchased the policy – I don’t need to change my policy.

Wrong – Becoming a non smoker puts you in a lower risk category than you were in when you first started the policy. This means your life insurance company needs to know about it and they will decrease your premium if your health is still the same.

My wife doesn’t earn a living – she doesn’t need Life Insurance.

Technically correct if your wife has no credit outstanding at the time of her death. However if you think about the costs of providing the same services for your family after your wife has died you may decide insurance is wise. (eg. If you are a working father – you may need to employ a nanny, or pay for a child care service while you are at work)

I have retired – I cannot get Life Insurance.

Just because you are over 65 doesn’t mean you cannot get Life Insurance – you can. You may have to shop around a little to get a good price, but policies for the elderly or retired are very common and easy to come by.

I can cash in my policy at any time.

The ability to “cash-in”, or surrender your policy is wholly dependent on what type of policy you have. An investment variety of policy will not only pay out in the event of your death, but can also be surrendered at any time whereby the insurance company will pay you a set percentage of the overall accumulated investment value of the policy. Things like “Term” life insurance policies do not allow for this and are just means to secure a risk for a set time period.

Suicide doesn’t pay out life insurance.

life insurance policies will pay out for suicide as long as the policy has been in force for two years or more.

There are a lot more myths about insurance – if you are in doubt contact your broker who will put your mind at ease about what is fact and which fiction.

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Can I re-apply if I am declined Life Insurance

Taking out life insurance is a big deal and requires a lot of shopping around. Each company seems to offer something more than the last one, and something less as well. They all have a multitude of forms to fill in, and want to know everything about your lifestyle, present and past.

That’s because each company runs their business in different ways, they have different ways to invest money and they prefer different customers. Some may prefer the stable middle age client, while others are more geared toward family packages.

It is unusual, but not unheard of to be declined coverage based on what you have put in the policy application form. This is usually because a particular answer sent up a red flag for that particular company and they decided that it would not be in their best interest to offer you coverage. Or, to put it another way, they figured that they would lose money in dealing with you.

This does not however mean that you are uninsurable. The first thing you need to do is to get in touch with the life insurance carrier and find out why they declined you coverage, ask for the specifics to be sent to your family doctor.

There are a number of reasons that you may be declined coverage :

  • You are a heavy smoker
  • Your job is regarded as high risk
  • Your regular business travel takes you into a dangerous country
  • Your favourite sport is considered too hazardous
  • Your health is not perfect.

With most of those you have two choices; either change the situation, e.g. get a new job or sport, or go and look for another insurance company. The second of these options raises another problem.

The one thing insurance companies do have in common is the question on their application form; “Have you ever been declined Life Insurance coverage?”.

If the answer to this is “yes”, then you automatically raise a red flag and any insurance company is going to want to know the reason why you were declined; hence your question to the original company. You need to be able to tell a new insurance company exactly why the other one turned you down, with specifics.

You are well advised to mention the fact that you were turned down by another insurance company before you ask for an application form and see what the new insurance company says. If they say that the situation doesn’t affect their policies, then go ahead and fill out the form. If they say they will also probably decline you because of it – do not fill out any form, that would be processed and would be recorded as another declined offer.

If you really cannot find another company that will cover you at an affordable premium, then you are going to have to look at changing the situation.

In most cases if the situation that caused you to be declined in the first place has been removed for more than a year it will no longer affect you and available coverage. For example if you were declined for being a heavy smoker, but have since given up for more than a year, most companies will not worry about the previous refusal of coverage.

When the situation is medical; you have a condition that the initial insurance company thought was too severe to allow you coverage, you are going to need medical proof that the condition has been removed or lessened before approaching another insurance company. You will also probably need a medical examination by a doctor nominated by the new insurance company to satisfy their acceptance criteria.

Finally, if you have removed the situation and approached other companies only to be told yet again that they will probably decline you it is time to call in the experts. Find yourself a good insurance broker. Explain the situation to them, don’t hold back any facts, and let them go and find you some coverage.

The advantage of insurance broker is that they regularly deal with lots of companies, and lots of different insurance requests. So, once they have the facts from you, they will probably know exactly which insurance company will say yes to you and they will be able to set things up for you.

In summary, every one should be able to get life insurance from somewhere. The premiums may vary, but the coverage is out there somewhere. Being declined by one insurance company doesn’t exclude you from being able to get coverage. In fact, it might act as a wake up call to you and nudge you into changing your lifestyle a little, just to get that premium down.

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