As we move from the stage of our lives with mortgages, young kids, and start looking towards retirement and settling down, our life insurance needs change fairly substantially.
When we’re young, we need a large amount of term life insurance. We need large amounts of coverage to replace our income over the years, and we generally are seeking term life insurance as it’s inexpensive while covering us for a defined timeframe – generally until close to retirement.
As we become seniors we no longer need to cover our income for many years. This drastically reduces the amount of coverage that many of us need. In addtion, we are generally looking to cover off final expenses, cover any shortfalls resulting from drop in pensions when we pass, and perhaps leave behind a small amount to our family.
While the exact amount of coverage tends to be difficulty to define exactly, common coverage amounts for seniors are $25,000, $50,000 and $100,000. These amounts are often enough to cover burial and funerals, pay off any lingering debt, and perhaps leave a small amount for our family.
The type of needs we have as seniors tend to be permanent – burial expenses, final expenses, etc are all expenses that are going to happen no matter when we pass. Thus, term life insurance is not an appropriate type of coverage for most seniors (because term life insurance eventually becomes unaffordable, or expires). Instead, we should be looking at permanent life insurance. Permanent life insurance has premiums that are level for life, with coverage that is level for life. Premiums stay the same no matter how old we get, and the coverage never expires. This ensures that the coverage is always in force for us and we never have to requalify or worry about increasing premiums again.
When looking at this type of coverage, we make the assumption that we are seeking the best life insurance coverage, at the lowest premium. This further assumes that any types of investments are not something we’re willing to pay higher premiums for. We’re sticking to life insurance for life insurance purposes only, and want the lowest premiums for that.
This directs us to three possible choices of life insurance policies; guaranteed whole life insurance, term to 100, and Universal Life insurance with Term to 100 cost of insurance. All three of these policy types are focused on the insurance portion of the policy at the lowest possible premiums.
While the idea of ‘no medical exam’ life insurance is attractive, in practice you should always seek out an underwritten policy first and foremost. No medical exam life insurance is designed for people trying to actively avoid medical underwriting deliberately, generally due to having medical concerns that make them uninsurable. The result is that no medical exam policies are often twice the price of an underwritten policy AND often have substantial policy features chopped out. Where possible, you should take the time to go through the underwritting process and skip no medical exam policies. This ensures that you have the best life insurance at the cheapest possible price.
That’s not to say that if you have medical concerns that render you difficult to insure that you shouldn’t purchase life insurance. For those Canadians, no medical exam insurance is a viable policy. It’s just not where you should go automatically.
If you’re a senior seeking life insurance, fill out the following form. We’ll contact you to discuss your specific situation, make a recommendation on types and companies, provide you premium quotes, and help you determine if you need a no medical policy or if a fully underwritten policy is right for you.