Why Guaranteed Premium Life Insurance is a Good Value

Universal life insurance can be a complex product. But it doesn't have to be. When you think about purchasing permanent life insurance this product is one you have to consider.

What Is Universal Life Insurance?

Universal life insurance is a product that is able to insure you for your lifetime.  The cost can vary greatly from one policy to another (even with the same carrier) depending on how it is structured. There are several kinds of universal life insurance (UL):

Guaranteed Premium UL- In this type of policy, the premium and the face amount will remain level during the life of the policy (as long as premiums are paid on time). These can be setup so that the policy lasts to age 95, 100, 105 or 121, or another age if you wish. They can also be set so that the policy amasses minimal, if any, cash value. When structured this way, they are going to be the least expensive permanent policies available. 

Indexed UL or Equity-Indexed UL- The cash value in these policies can be tied to different stock indexes, such as the S&P 500, Nasdaq, etc. How the index performs will determine your returns. Your money is not actually invested in the index, just tied to it for interest accounting. You can't lose any of your cash value, but it can grow! 

Variable UL- This policy is considered a security and is only available for purchase through a broker-dealer. This is a high risk product and should only be bought by a sophisticated investor.

Some Factors Affecting the Premium Are:

• Your underwriting rating-  This rating is affected by many factors, some of them are your age, build, medications, health history, family health history and more.
• Cash accumulation- Do you want to have the policy earn cash value ?  If so, you will pay a higher premium.
• Do you want a guaranteed death benefit?
• Do you want guaranteed level premiums?
• Do you want riders- such as waiver of premium or accidental death benefit riders?  They will add to the premium too.

Some Pros and Cons:

• Pro- the policy will last for your lifetime with a level death benefit and face amount.
• Pro- with minimal cash value, guaranteed premium universal life will be the least costly permanent policy available.
• Con- the policy is more expensive than term insurance. Only a small percentage of term insurance is paid out, however permanent policies have a much higher payout percentage and so cost more. 
• Con- It's extremely important to pay your premiums on time. The guarantees structured are dependent on payment in a timely manner. If you miss a payment or are late, it can affect the guarantees and your premium could increase. 

What is Guaranteed Premium Universal life insurance?

In this video Lenny will explain how Guaranteed Premium Universal Life Insurance works.  And of course he will talk about the universal life insurance pros and cons!

Guaranteed Universal Life Insurance Policies Requirements

The type of life insurance you purchase will depend first on your needs. If you need coverage for your lifetime this type of universal life policy will be the least expensive.

As I mentioned earlier, this product requires full underwriting. You will be required to have a paramedical exam. An examiner will come to your home or office and take a complete medical history. They will take your height, weight, and blood pressure. You may need an EKG, and if so, they will bring the machine. There is NO disrobing. They will draw blood and you will give a urine sample. 

Then your application, exam information and laboratory results will go to an underwriter at the insurance company. They will determine if they need more information. If so, you will be asked more details, and /or your doctor records will be requested. (The insurance carrier or your agent will order these.)

They will run a motor vehicle report and check your driving record. If you have multiple speeding ticket, or a DUI, you may have difficulty getting insurance coverage.

The insurance company will order your MIB (medical information bureau) record. If you have previously applied for life insurance there will be a file. If you were declined or rated up, there will be a code telling the current insurer to find out more information. There are no details in the MIB.

Using all of this information, the underwriter will make a decision about your insurability and decide on your rating. The better your rating, the lower your premium. 

We have had cases where our internal underwriter has gone to the insurance carrier and made a case for a better rating than we received. Many times we are successful in getting a better rating. Unfortunately, not always!! As agents generally cannot talk to the case underwriter, this is a nice benefit of using an agent with an independent in house underwriter.

The Bottom Line

We hope this article helps you to understand the Guaranteed Premium Universal Life Insurance pros and cons.  We find that this policy is often able to fit the needs of most of our clients who want permanent coverage.  The guarantees make this product very desirable, and the lower cost doesn't hurt either.  

Video Transcript:  

Hi. I'm Lenny Robbins at LifeNet Insurance Solutions coming to you today from a rainy Seattle and I'd like to talk with you about a permanent type of policy known as a guaranteed premium universal life policy. This is one of the two major types of life insurance that is designed to stay in effect as long as you live.

The benefit to this type of policy is that it is designed with a premium that will never change as longs as the premium is paid in a timely fashion. So you can always be aware and comfortable with the fact that you will not have increasing premiums at a time when the coverage is most needed. The negative or the con of universal coverage is that it is designed without cash value so that you will not be able to withdraw money from the policy if you need additional cash. 

However, you will find that premiums are generally substantially lower than it might be in a whole life policy. And in fact, today most companies are not in the whole life business any longer because of the ability of this type of universal coverage to meet most needs. And we find that it allows people to pre-plan effectively as they get older.

So whole life insurance is just more expensive, not done any longer by most  carriers. Universal coverage is clear, easy to understand and best of all, it's easy to compare one carrier against another to see where you're going to get your best value.

life insurance for seniors over 50

How To Get The Best Quotes for Seniors Life Insurance

Comparing quotes online is a logical first step in the seniors life insuranceshopping process, but wise consumers won’t stop there. Online quote enginesare great for getting an idea of what’s out there, but they’re not the smart way to buy. A life insurance agent is the best way to buy life insurance.  For certain types of life insurance, you can't even get a quote without an agent.

Step One: What Kind of Senior Life Insurance Do I Want?

One of the first decisions you need to consider is what type of coverage you want to buy. You can get term life, whole life, or universal life, and each type has multiple choices. Let's do a quick description of these so you know what they are.

 

• Term Life Insurance
  As the name implies, this is insurance that lasts for a specific period of time. We prefer level term insurance, where the premium and the face amount remain the same for the life of the policy. You can get insurance for one year up to 30 years (depending on your age). 
   Download -- Life Insurance 101
• Permanent Insurance
  This type of coverage will last for your lifetime and includes both whole life insurance and universal life insurance. These policies will usually be more expensive than a term policy, however, as we age, the difference between the premiums shrinks. You may find a permanent policy is not that much more expensive. (Also, permanent policies have more lenient underwriting, so you may get a better rating!)
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  Baby Boomers Guide to Life Insurance
• Universal Life Insurance
  These are permanent policies that are very flexible and can be structured to have little to no cash value, a level premium and a level face amount. Set up this way, they are usually the least expensive permanent policy on the market. Minimum face amounts may be $25,000, $50,000 or $100,000. That will depend on the state you live in and the carrier you choose.
• Whole Life Insurance
  The whole life insurance policies are generally final expense coverage. These policies range between $2,000 and $50,000 of insurance. They have simplified underwriting and no exam is required. They can be placed in force very quickly. For seniors who want less than $25,000 of life insurance, this is the only option. 
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  Final Expense Life Insurance Handbook
  
  

Step Two: How Do I Get A Quote?

Choice One: Let's Look for On-Line Quotes

• You will be able to find seniors life insurance quotes online for all of the types of coverage mentioned above. The question will become, how accurate are they? (And what don't you know, that you don't know? More on this later!)
• If you begin your shopping for life insurance by going online, you’ll find lots of sites urging you to buy immediately using their site.  The first thing you see on their site is a form to fill out to get a quote. This is particularly true for term life.
• After supplying some basic information, perhaps including a few health questions, you’ll be given recommended buys—with the hope that you’ll choose from among those carriers and look no further. 
• The website may limit the number of carriers it shows you because by limiting sales to a few carriers, they can earn higher commission levels and bonuses for the agency.  Unfortunately this doesn't do you any favors. 
• After going to a large insurance site and using their online quote engine, once you decide on a carrier, you click the apply button. You’ll be called by an agent working for that site, who theoretically is supposed to help you with your decision. But, in reality, this agent’s primary purpose is to convince you to buy from one of the the carriers he or she represents.
• At this point, you’re not getting genuine advice—you’re being guided to buy from that specific carrier or one of the other few carriers they represent.  They are like order takers, fielding one call after another. You will not have much or perhaps any more interaction with them during the underwriting process, as all they do is take orders.
• Someone else will follow your application and (hopefully) make sure all of the requirements get to the company so that your file gets to an underwriter.
• This may work fine if you are in your 20s or 30s or maybe even your 40s and you are healthy.  Once you start to have medical issues, lifestyle issues and are older, this is probably not your best option. The more "issues" you have, the more important it is for you to work with an agent.
• Most of this refers to term life insurance. If you are looking for permanent coverage, you may still find the same applies, but hopefully this is not how you will find the best coverage. (Universal life insurance has many different flexible options to choose from. Getting a quote online makes no sense because you won't know how the policy is structured. You need to speak with an agent to be sure you get the right fit.)

Choice Two: Choose an Independent Agent for a True Advisory Relationship 

A successful independent life insurance agent doesn’t operate that way. Because they’ve built their business on customer satisfaction and long-term relationships you are not just another order to take. Once you’ve looked around on the Internet, when you speak to an independent life insurance agent, they can provide the following.

• Your agent has the ability to fully understand your situation, taking as much time as necessary to get the details needed to give you a more accurate quote.
• Your agent has experience which gives them insight into the range of options available to meet your insurance goals.
• Your agent has thorough knowledge of various life insurance strategies and how they relate to solving  your particular needs.
• Your agent has the knowledge to help you find the carrier which will look at your application and be most likely to give you the most favorable underwriting rating. (Here's the part you don't know you don't know!) Every insurance company has slightly different underwriting guidelines. You may get approved at different levels from multiple companies. For simplified issue products, you may get approved by one carrier, but declined by another. This is an important benefit of talking with an independent agent.
• Your independent agent has a strong desire to find the best solution to ensure your satisfaction, because they want you as a client for life.
• Your independent agent is not tied to any insurance company. They have access to multiple carriers, so that the advice you’re getting isn’t skewed toward a particular few. They want to find you the best deal you can get.
• Your agent will provide timely follow up on requirements needed prior to and during the carrier underwriting your application.
• Your agent will deliver personal communication on a regular basis to keep you informed of your applications progression to underwriting
• Your agent will have options for you if the underwriting decision is not what you had hoped for. There are always more choices.

Being independent agents, we want our clients to get the best deal on life insurance that they can. Sometimes we have clients talking to another agent and the other agent gives them a lower price. Well, we all want the best pricing, but which agent is right? Probably the one you gave the most information to. It's nice to get a low quote, but is it really helpful if you can't qualify at that level? If you get rated differently, now you don't know if you have the best pricing at the new level. (Because one company is usually not the lowest cost carrier at all different ratings, you may not get the best value if you don't work with an independent agent.)

(Here's another thing you didn't know you didn't know!)This one is important...ONLY an insurance company can offer you insurance. (An agent cannot offer or guarantee any coverage, only the carrier can.) Your agent is giving you their best estimate of the rating you will receive. This is based on the information you share with your agent. But an insurance company will have much more information when they make an underwriting decision. They will have your exam(if there is one) and lab results. They will have results from a pharmacy database and the Medical Information Bureau. In fully underwritten coverage, the carrier may order your medical records. As mentioned, they will have much more information to base a decision on than your agent. 

The Bottom Line

Buying online may seem more convenient, but it’s really not. You still have to complete an application and possibly take a medical exam. And in exchange for the illusion of convenience, you’ll be missing the opportunity to get legitimate expert guidance from an independent life insurance agent who has a vested interest in helping you get the best value. 

As you can tell, we favor you working with an independent agent. Find someone you are comfortable with, check their reviews, and feel free to look them up on the Insurance Commissioner's site in their state of residence. We want you to be comfortable with your agent as getting seniors life insurance quotes is one of the most important steps  to keeping your family secure.

Download
Final Expense Life Insurance Handbook           Free eBook
Baby Boomers Guide to Life Insurance

life insurance for seniors

Getting Affordable Life Insurance for Elderly Parents

If you are lucky enough to have elderly parents or grandparents (or aunts or uncles) you may find you are needing to help them purchase some life insurance. Unfortunately, many of us wait until we are older to decide we need some coverage. Many elderly family members want some final expense insurance and we can help you make it easy for all involved.

Reasons for Coverage

Did you know that there are many reasons why life insurance for elderly parents is a good idea? You need to consider not only the reasons they may need life insurance, but what are the consequences if they don't purchase coverage. Who will pay for their final expenses?  Let's figure out the best ways to approach getting your family insured.

Here are some of the more common reasons why life insurance for elderlyfamily members may be needed.

• Final expenses- The average cost of a funeral in the United States is over $7000. That's the average, so depending on where you live and what your parents want, it may be even higher. Do your parents have enough savings to cover their final expenses? If not, who will pay for their funeral? (I know this is not a fun thought, but better to figure it out now than when the time comes!)Download
  Final Expense Life Insurance Handbook
• Debts- What is your parent's financial situation? Will they leave debts behind? Are there assets to cover the debts or will they be left for you? Life insurance can be used by the beneficiary for anything at all and is generally a tax free payment. 
  • Medical Bills- Fact, most people have the highest medical bills near the end of life. So you may find you or a surviving parent is left with huge medical bills to pay off.
  • Mortgage Payments-Do your parents have a home? Will the house be paid off when they pass away? If so, it will be an asset for you. If not, what do you do? Some life insurance money may ease this burden and allow you to keep the property.
  • Inheritance- Do your parents want to leave a little bit of money to their children or grandchildren? If they are on a fixed income, life insurance can increase the amount of money left at the end of their lives.
  • Special Needs Child or Grandchild- If you parents have a special needs family member, they will need help for their entire lifetime. Life insurance allows for support for their special needs child.
  • Other Reasons- You may find a family member needs coverage for something we haven't thought of!

  What Kind of Coverage is Available?
  
  Senior citizens can purchase term life, whole life or universal life. There are different types of policies available based on your needs, finances and insurability. 
  
  However, when you are dealing with seniors and end of life reasons for life insurance, term policies don't make a lot of sense. If your parent outlives the term period, the cost of that policy will skyrocket and likely make it not affordable, or they may be too old to purchase any coverage or it may be too costly. You only want to look at policies that last for their lifetime.

   

  You can purchase coverage up to age 89. However, at that age, the premiums are very expensive! It makes sense to get insurance earlier, when the cost is more manageable. Universal life policies are available up to age 90. Final expense coverage can be purchased through age 89 for level benefits. For graded benefits, age 80 is usually the maximum. Guaranteed issue policies can be bought through age 85.  

• Universal life insurance is permanent coverage that is very flexible. It can be structured so that cash does not accumulate and the premiums and face amount are fixed. (These policies are called guaranteed premium universal life insurance.) There is a $25,000 minimum face amount. (Some states and/or companies require a higher minimum.)
  • This is the least expensive type of permanent policy available. It requires full underwriting. That means they will have a paramedic exam, blood test, urine test, and full medical history. The insurance carrier  may also require a simple cognitive exam. Doctor records will be ordered. If you family member doesn't go to the doctor regularly, they will not be able to get this type of policy.

• Whole life insurance is permanent coverage too. 
  • There are whole life policies that are fully underwritten for higher amounts of coverage, however, you will find that Universal policies for the same amount of coverage will likely be less expensive. There are very few companies that even offer this kind of coverage.
  • Final expense policies- These are whole life policies that have simplified underwriting. That means there is no paramedic exam, blood or urine. It is generally easier to qualify for these types of policies. The policies range from $2,000 up to $40,000. For more coverage you would have to purchase policies from multiple companies. If you qualify at the best level available, these policies pay the full face amount on day one.
  • Graded final expense policies- If you can't qualify for the best level final expense coverage, most carriers have at least one other level. Graded final expense coverage is not fully in force on day one. If the insured dies during the graded period (two or three years), the beneficiary will receive either a percentage of the face amount, or all premiums paid will be returned with interest. Every company has their own method. 
• Guaranteed issue life insurance- If your parent cannot qualify for any medically underwritten policy, this type of policy is available. There are no medical requirements. Every applicant is approved. The payout works like a graded policy, most companies simply return all premiums paid with interest if the insured dies during the waiting period.Download
  Final Expense Life Insurance Handbook

• How Do You Know Which Type of Policy is Best?
  

  
  There are a few things to consider...

• How is your parent's health? This is one of the more important questions you have to consider as their insurability affects the products you can consider. Will your parent want to take the medical exam? Fully underwritten coverage usually takes at least four weeks, and often longer. Getting medical records is the primary reason this coverage takes a while to put in force. Records can take anywhere from one to six or more weeks. The larger the health facility, the longer the records typically take.

• How much insurance are you looking for? This will help you hone in on which type of coverage is best suited to fulfill your goals. Obviously a small amount (less than $25,000) is only offered for final expense coverage. If your parent wants $100,000 or more of coverage, it makes sense to get one fully underwritten policy.

• How much effort do your parents want to expend getting life insurance?

• Talking to an independent agent who is experienced in dealing with seniors will help you determine what kind of insurance will work best. Your agent will ask questions that will help them help you determine which type of coverage will make the most sense. 

Buying Life Insurance for your Father or Grandfather 

Men are more expensive to insure than women. This is because women live longer than men (as a rule). Most likely, your Mother or Grandmother will be alive when your Father or Grandfather passes. Life insurance makes a difficult time just a bit easier. 

Buying Life Insurance for your Mother

As women usually live longer than men, your Mother may be the last of the pair to pass. The children will be responsible for making and paying for all of the final arrangements. Again, life insurance takes one burden away.

Funeral Services

If you have insurance, when the insured passes, many funeral homes will provide services without the cash in hand. They will have the beneficiary sign an assignment form essentially making the funeral home payee for the amount of the services provided. The beneficiary will then get the balance of the life insurance policy.

The Bottom Line

Talking to your Mother and/or Father about purchasing life insurance may not be the easiest conversation to have. But you may find it to be a necessary one. Get all the facts before you start. A conversation with an independent life insurance agent will give you indispensable information to share with your parents, including pricing. Have that talk today because life insurance gets more expensive every year you wait.