When a person gets into their 60’s, 70’s and above there is a real life insurance industry tendency to try to shove them into the final expense market, even at a time when people are working longer and have larger needs than most final expense policies offer.
So let’s break this down and look at some real life comparisons. Let’s take a serious look at what most final expense companies want their upside to be, getting life insurance without an exam or being guaranteed life insurance without health questions. It is amazing to me how much traction these companies have pulled with those two bullets and how easily distracted people looking for senior life insurance are from the issue of cost per thousand. Let’s also take a serious look at what us older folks life insurance needs really are and, why not, let’s take a look at the age old argument of term versus whole life.
As I crash in on 60 at the same time that the economy crashed in on zero, several of my preconceptions about my golden years turned into misconceptions. If I had done what my Mother told me and stayed with one company all my life and not done this self employment “thing”, well, I would probably not be in a lot different position than I am now. That worked well for my Dad, but everything I have read says that the golden goose has pretty much laid the last of its’ eggs.
So we do what we need to do and for many of us that means that we will be working longer and because of that our life insurance needs may be different and our portfolios may need some adjustment. Many of us have also done what we needed to do and are once again parents, not raising children, but grandchildren. The life insurance we carried as parents for our children’s sake is just as important now as it was back then.
So we’re older. AARP and New York Life would like you to believe that they have the answer to your life insurance needs. They’re lying! We’ve talked about that before. Every advertising medium from print to the internet is screaming final expense insurance but let’s face it, final expenses with longer life expectancy, more working years until retirement and sometimes more up close and personal grand parenting, have changed. They’re bigger. They need to be affordable longer. They need to adapt to the new golden year scene.
So we need larger, longer and more affordable. Should we have bought whole life a long time ago? Putting aside my disdain for the product momentarily, let me just honestly tell you that I believe the answer is no. Three reasons I don’t believe that would help you out now is that 1. The amount that the average person can afford when they are younger wasn’t meaningful then and will be even less meaningful now. 2. By now you would have outlived any flexibility in the policy that would allow you to adjust the amount of insurance, and even if you hadn’t affordability will rear an even more ugly head now. 3. With several companies offering guaranteed 10 year term or term/ul products with issue up to age 80 and conversion up to age 85, larger, longer and more affordable are right there for those that need it.
Just a quick comparison at age 80. You can get $50,000 of whole life (no term available at age 80) with AARP’s New York Life product for about $480 a month. Assuming you may have some health issues by that age, compare that to a fully underwritten approval at a standard rate through Minnesota Life for double the face amount, $100,000, at $479 a month. Will everyone qualify at standard? Well, no, but the truth is that most will. New York Life’s rates are not guaranteed to remain level. Minnesota Life’s are guaranteed.
AARP’s pitch is no exam. That doesn’t mean they don’t look at your medical records or ask medical questions that must be answered honestly for the policy to be valid. It just means they don’t do an exam which all full underwriting companies do at your convenience and at no cost to you.
Bottom line. It’s a tough conversation and sometimes a tough pill to swallow, but final expense insurance for most of us isn’t what it was for our parents. The products have changed to meet our needs. Term insurance is available longer than ever and conversion options are being held longer than ever. Now we need to wrap our minds around the way our needs have changed.