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If an older person does a search for final expense life insurance, the typical policy that someone in their 60’s or 70’s might want, you could easily be led to believe that the only thing available is guaranteed issue or no exam life insurance (simplified issue).

Big names like Colonial Penn, AARP and Globe tend to dominate the landscape. When you really dig into what they are offering it makes me wonder if they are just hoping you will be wowed by the household names and not look at the details too closely. What they don’t want you to know is that there are choices and those choices can often be far better than what they are offering. The trick? Take an exam, in the convenience of your home if you want, at no cost to you.

Let me put one misnomer to rest about no exam life insurance. Just because the company doesn’t require an exam doesn’t mean they won’t decline your application. They still ask health questions and they can decline to offer coverage if you answer yes to any health questions. They can still access information from the Medical Information Bureau and check to make sure you’re not fudging on your health history. They can still order medical records if they think there is a reason to. Bypassing an exam is not a free ticket to senior life insurance approval.

Let’s use Colonial Penn as a test. I’ll use me, age 57, for a sample. I decide I want a 20 year term policy that will cost me $79.25 a month for their maximum $25,000. If I go ahead and take an exam and get the fourth best rate class, a standard rate, I can get $50,000 with a guaranteed rate for life (not 20 years) for $61 a month. I can get $25,000 for $38 a month. If you want $25,000 of permanent insurance, a whole life policy, with Colonial Penn at my age it would be $106 a month. Remember, whether it is a term insurance for 20 years or a lifetime guarantee product, it is the company that is locked in, not you. You can drop the coverage whenever you want so in the example above if you really just wanted coverage for 20 years you could have twice as much for $18 less per month. And you would have the option of keeping it in force if you wanted.

If you are over 50 life insurance applications and exams are not something to avoid. I have a number of clients who have been approved at preferred rates in their 70’s and 80’s because they knew their health was good and were willing to take an exam. Remember I used standard rates in the comparison above. That’s two rate classes more expensive than preferred.

One last thing that all of those final expense companies like to hold out there in their permanent products is that it is whole life and builds cash value. Keep in mind that cash value isn’t added on to the death benefit if you die and if you borrow against it, it is deducted from the death benefit if it hasn’t been paid back. If you don’t pay the interest your policy can lapse. Cash value isn’t magic. It comes out of your pocket and you don’t get it back.

Bottom line. The best rates and the best guarantees always come from a fully underwritten life insurance policy with an exam and a review of your medical records. Don’t be sucked in by “guaranteed issue” or “no exam’. They want it to sound easy because they don’t want you to worry about the details.