Life Insurance and the Sick and or Elderly Part 1

Life Insurance and the Sick and/or Elderly

Part 1

May 9, 2016

What is Life Insurance For?

Life insurance is used for many things. It can be used to pay final expenses, for an inheritance, paying burial costs, etc... But the primary reason for life insurance is to replace income due to death. 

With that being said, I have been challenged a few times on what kind of life insurance someone should get if they were sick or elderly. You see, as a life insurance agent, I ONLY recommend and sell Term Life Insurance. And if you're really sick or elderly (mid 70's or older) you're not going to be able to get term insurance. Let me explain why.

Term Insurance 

Term insurance is insurance for a specified period of time or term. Example, a 20 year term policy is only good for 20 years. A 30 year policy is only good for 30 years, and so on. Once those terms are up, you are no longer covered.

Normally, when you apply for a term policy, there is a medical exam and questions about your's and your family's medical history will be asked. The only exception to this is when you get life insurance through your employer. So, if a red flag pops up anywhere during the exam or medical history, you may not be able to get insurance, but that is the underwriter's job at the insurance company to decide.

So the challenge to me was, If someone is too sick or elderly to get term insurance, wouldn't a Cash Value life insurance policy be better to get? Before I answer that, let me explain what cash value policies are.

Cash Value Insurance

Cash value policies are a life insurance product that have a savings account built into it. These policies have many names. Whole Life, Variable Life, and Variable Whole Life. All three of these policies are a bit different from one another, on what they can and can't do, but in all, they are pretty much the same.

Normally, when you apply for these type of policies, there are no medical exams or medical questions asked. And as long as you pay the premiums, the policy is in effect until you reach 100 years old. Plus, as I said above, it builds cash value over time, from which you can borrow from if needed. Sounds pretty sweet doesn't it? Why wouldn't anyone want to do this? It's because it's a big rip off!

Part 2

I hate to leave off on sort of a cliffhanger, but there is a lot of information on this topic and I don't want to leave any of it out. I also don't want to make this post really long. So we will pick up where we left off here on May 16th.

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