You may think that saving money on life insurance is not possible over 50 years of age. But there are several steps you can take to ensure that you can qualify for the best possible rates for your age and health.
We are going to look at 8 of the easiest and most effective ways of reducing the cost of what you will have to pay for life insurance. Some of the information here you may already know, and some of it may surprise you.
Either way, these are important steps for anyone to consider before shopping for life insurance policies.
1. Apply for life insurance today
You have probably heard that old Chinese proverb that goes: “The best time to plant a tree was twenty years ago. The second best time is right now.”
That wisdom rings true for many things, and life insurance is one of them. After all, you are not going to get any younger. And the fact is – all else being equal – that the younger you are the cheaper your life insurance will probably be.
Even for applicants over the age of 50, it is possible to qualify for high-quality life insurance policies at affordable rates. But continuing to put off the application process for another day only exposes you to the potential for higher premiums – not only from advanced age but also from unforeseen health concerns.
Even relatively minor health concerns can make quite a difference in how much a life insurance policy could cost.
As an example, we were helping a 58 year old lady recently that needed to purchase an additional $250,000 of 20 year term. We helped her place some life insurance a couple of years ago and she was able to get a standard plus rate.
Since she did not believe her health had changed we assume she would be able to qualify for a standard plus rating. It turns out when she completed the medical exam for the life insurance policy her cholesterol was elevated quite a bit and her blood pressure was up a bit as well.
This was a surprise to her.
She admitted that she hadn’t been to the doctor in a couple years. The insurance company did approve her but at a table 2 rating. At standard plus it would have cost her about $94 a month.
Since she was approved at a table 2 her premium was going to be about $139 a month. That’s a big difference!
After she goes to see her doctor and gets her cholesterol and blood pressure under control she will be able to reapply and hopefully then be approved at the lower rate.
She will have to wait a minimum of 6 months. This is typically the case with most life insurance companies.
Having high blood pressure or high cholesterol is not necessarily a big deal as long as it is being treated and is under control. If it is not being treated and under control then that is a big deal!
Life insurance companies want to know to that you are being proactive with your health.
2. Choose the right kind of life insurance policy
There are many kinds of life insurance policies available, and sorting through your choices can be more than a little daunting. The most popular types of life insurance are:
- Whole life insurance
- Universal life insurance
- Term life insurance
Knowing which is the best life insurance for you and your family’s needs will go a long way towards ensuring that the money you spend for life insurance is money well spent!
Whole life insurance is precisely what it sounds like. You purchase a policy that covers you over the course of your entire life. Premiums remain the same throughout from the first day to the last, regardless how old you might live to be or any health issues that might arise along the way.
Another advantage of whole life is that the cash value of the policy grows tax-deferred. On the other hand, because it takes time for the cash value of a whole life policy to grow, it may not be the best choice for every individual over 50 years of age.
At first glance, universal life insurance appears similar to whole life. But the key difference in many plans is that the policy can be structured as a low cost way to provide lifetime coverage.
With a guaranteed universal life policy this is coverage that can be structured to last for your entire life with a guarantee that as long as pay your premium the policy stays in force. Very little if any cash value is built in these types of plans. These are really designed just as a way to provide low cost lifetime coverage.
Again, whether or not a universal life insurance policy is the right plan for someone over age 50 will depend on his or her unique situation.
Finally, term life insurance is perhaps the most straightforward kind of plan available. About 9 times out of 10 we will recommend term life as the most appropriate coverage to buy.
Term life pays a death benefit only and does not build any cash value. Instead, you are covered for a given number of years, which is usually 10, 15, 20, or 30 years, though other options are available. And with most policies, your premiums will remain the same throughout the period of coverage.
Many people over 50 years of age find term life more ideal. Usually, this is because many at this age are still working, and the policy provides security to loved ones in the event of death.
A 20-year term life insurance policy, for example, might give older policyholders the time they need to pay off mortgages, continue investing for retirement, or delay Social Security benefits.
Whatever your situation may be, we highly recommend you speak with a qualified independent life insurance agent before choosing a policy.
3. Buy a larger life insurance policy
This may seem counter intuitive at first, but life insurance, like most things, is usually a better value when purchased in bulk. We are, of course, talking about the death benefit of the policy. Typically, the cost per $1,000 in coverage goes down as the amount of coverage purchased goes up.
Now, we are not suggesting that you purchase more life insurance than you need. That would not make a lot of fiscal sense. What we are talking about is getting the most bang for your buck so to speak!
A good life insurance agent can help you determine if there is an opportunity to get better value in your premium dollars by understanding how the cost per $1,000 works.
Here’s an example based on a very healthy 55 year old man looking for a 20 year term policy. With Banner Life Insurance for instance if he were able to qualify for preferred plus rates he could either buy:
$250,000 for $63.43 per month or…
$200,000 for $62.06 per month
This is a no brainier! For an extra $1.37 per month he was able to obtain an additional $50,000 of coverage.
4. Opt for the medical exam
You have probably heard of policies called “guaranteed issue” or that require no medical exam. Depending on your situation, these can be great options. For example, an applicant with health concerns might find they only qualify for a guaranteed issue life insurance policy.
Another reason you may want to consider a no medical exam life insurance policy is if haven’t been to the doctor in a while and haven’t had your labs completed for a while either. If you aren’t confident in how your labs are going to look you may want to consider a no exam policy.
Having said that, choosing a policy that requires a medical exam could save you a lot of money in premiums. This is sometimes true even for people over the age of 50 with minor medical conditions. And for healthy applicants, it is almost always advisable to choose the medical exam.
It is always best, though, to discuss your situation with a qualified life insurance agent before making such decisions.
5. Pay your premiums annually
Many life insurance companies allow you to make premium payments yearly instead of monthly. Not only is this more convenient, but in most cases paying annually does provide a discount.
Ask us if this is an option. And you might ask, too, if there are discounts for automated premium payments directly from your banking account.
Here’s an example with one insurance company on a 60 year old very healthy woman with a $500,000 20 year term policy.
The monthly premium is $138.51.
The annual premium is $1,620.
Paying monthly will cost a total of $1,662.12 per year. If she chose to pay annually she would save $42.12 per year.
6. Get into shape
You do not need to be an Olympic athlete to get the cheapest life insurance premiums possible. But getting any health concerns under control could very well help you qualify for more affordable premiums.
For example, exercising regularly can have an enormous impact on your overall health, positively affecting many issues that could be a concern for underwriters. Of course, you will want to check with a physician before beginning any kind of exercise routine.
Or, if you do have some health concerns, you could always do the following after purchasing a life insurance policy…
7. Request a reevaluation
You might believe that your life insurance premiums cannot change for the better after having purchased a policy. That is not necessarily the case. If your health has improved, you may want to ask your insurance company about a reevaluation.
A few changes your life insurance company might consider are:
- Lower blood pressure
- Lower cholesterol levels
- Losing and keeping off weight
- Stopping tobacco use
This isn’t a complete list, but these are some of the more common improvements you can make to your health that might qualify you for a reevaluation of your premiums.
Many insurers will require that a certain period of time has passed before allowing a reevaluation, usually 1 year. For smokers, most life insurance companies will require a longer period of time to have passed since quitting before a reevaluation is available.
The other thing to consider is that even if your current insurance company won’t lower your rate you may be able to obtain life insurance coverage at a lower cost with a different insurance company.
A great example is with a guy we helped not too long ago. He used to smoke cigarettes and use marijuana.
Well, he ended up quitting smoking cigarettes. Once he had quit for one whole year we would be able to get him approved for non smoker rates and save him a lot of money.
Quitting smoking cigarettes goes a long way towards lowering the cost you have to pay for your life insurance.
This guy was still using marijuana occasionally. Therefore, many companies would still rate him as a smoker since he uses marijuana even though he uses only once or twice a month. However, several others would not.
The company he was with would still rate him as a smoker based on his usage of 1-2 times a month.
We ended up helping him get life insurance with a different company that had more favorable marijuana underwriting criteria and we were able to get him approved with a non smoker rate!.
8. Shop for the best premiums
This should really go without saying. But many people over the age of 50 continue to purchase life insurance policies without having ever shopped around for the most affordable coverage. This might be because they found it convenient to buy a policy from the same company who provides their home insurance. Or perhaps they were referred to a particular company by a friend.
Not all life insurance plans are created equally.
What many people do not realize is that comparing rates between insurance companies is easier than ever. Yes, thanks to the internet, shopping for the best coverage can be done in minutes, not hours or days. In fact, independent agents like us work with dozens of companies and are able to quickly check rates from a wide range of insurance companies..
Shopping for life insurance with a qualified independent agent is the quickest and easiest means of saving money on your life insurance.
Make sure you are open and honest with your independent life insurance agent. The more they know about you the better.
The more they know about your medical history, driving history, and other lifestyle habits the more they can match you to the company that will look at your application most favorably.
Make sure you understand all of your options!
And speaking of options, we have certainly thrown a lot of them out there in this article. Don’t feel overwhelmed. You can give us a call.
We would love to help you navigate your search for the perfect over 50 life insurance policy.