Life Insurance and the Sick and or Elderly Part 3

Life Insurance and the Sick and/or Elderly 

Part 3

May 30, 2016

Part 2

In Part 2, I went over why cash value policies are a rip off and why it is best to buy term and invest the rest. This week, is probably not going to be one of my most popular posts, because I'm going to go over what I think you should do if you're too old or too sick (currently or from a past illness) to get term life insurance.

Age Limits

It is true, with all term policies, there are age limits to who is insurable. These limits vary form company to company, so if you're looking for a policy, check to see if you are insurable due to your age.

I also have to tell you that the older you get, or the closer you get to those age limits, the less insurance you'll be able to get and the more expensive they will be.

Here is an example of what we sell...

For an 80 year old non-smoking male (our age limit) wanting a $100.000 policy. He can only qualify for a 10 year policy for $606.50 per month. That's a lot of money!

Too Sick

Also, if you're too ill or had an illness or medical event take place that the insurance company would deem too risky to insure you, you maybe be uninsurable to get a term policy. Now, depending on the illness or medical event, all you may have to do is wait a period of time (sometimes a few years) between the time of the illness or event to pass before you're insurable again. If you get denied a policy, ask the agent if this is a permanent thing or if you have to wait before trying again. They should be able to get that information for you. Also shop around. Just because one company won't insure you, doesn't mean another won't.

My Thoughts

This is where things will probably get unpopular. This is strictly my opinion so take it as you will...

I had mentioned in Part 1, that the main purpose for life insurance is to replace lost income due to death. Well, if you're too elderly or too sickly to work, replacing income isn't going to be the purpose for you getting insurance. You're getting it to cover the cost of your burial.

So again, this is my opinion. If you're willing to pay extra for a cash value policy or an expensive term policy, I suggest saving that money in an account somewhere and self-insuring for that event instead. Even if you're not too ill or elderly to work, but are uninsurable, I'd do the same thing. And have that account earmarked as your funeral fund. I would also let whoever is going to be in charge of your burial know about the account and what it's for.

Folks, in the little research I've done on funerals and what they cost, depending on what your wishes are, a typical funeral can cost anywhere from a few thousand dollars to up to $15,000. Depending on your age and/or illness you may have, you can self insure for your passing.

I do have to mention though... when you're young, healthy, and "Bullet Proof", you don't think of these things. YOU NEED TOO!!! No one who was elderly or having a terminal illness ever said, "I wish I had never bought life insurance." No one has ever said that! And having the coverage at an affordable rate is ideal. You are then passing on the risk of your death onto the insurance company instead of taking it on yourself. Something to think about.

If you have any questions on this matter, please contact me at bunncapitalchoice@gmail.com. I'd be happy to help!

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Life Insurance and the Sick and or Elderly Part 2

Life Insurance and the Sick and/or Elderly 

Part 2

May 16, 2016

Last Week

Last week, I talked about what life insurance is for. That it's primarily for replacing lost income due to death. I also explained that there are basically 2 types of life insurance on the market today (Term and Cash Value) and the difference between the 2. I also mentioned that as a life insurance agent, I ONLY recommend and sell Term Life Insurance even though I have been challenged a few times on what kind of life insurance someone should get if they were sick or elderly. And lastly, at the end of the blog, I mentioned that ALL cash value policies are a complete rip off. Here's why.

Why Cash Value is a Rip Off

The reason I say they're a rip off is because there are only 3 ways you can have access to the cash value portion of those policies. 1) You reach 100 years old. 2) You cash out the policy. And 3) You take out a loan on it. Which you DO have to pay back. If you don't pay it back, the insurance company will take what is owed out of the death benefit once you die.

And here is the biggest reason why cash value policies are a big rip off. When you die, the insurance company KEEPS the cash value portion and only pays out the face value (death benefit) of the policy. How is that right?


Buy Term and Invest the Rest

Another way insurance companies push these cash value policies is that they emphasize the cash value as a way to "Save For Retirement". So let's look at that a bit. I got quote for a whole life policy from a nationally known insurance company and compared it to a term policy from another nationally known company, I would sell.

I based both policies on myself. A 50 year old, non-smoking male, wanting a $50,000 death benefit policy. As you can see below, there is a huge difference in the monthly cost.

Whole Life       /    10 yr Term 

$109 per mo.    /     $22.70 per mo.

A difference of $86.30. That's huge! Even if I were to bump the term policy to a 30 year policy, I wouldn't even come close to the monthly cost of the whole life policy ($43.77 per mo.) So what would happen if you bought the term policy above and invested the rest outside the insurance company? $86.30 at a 10% rate of return for 35 years (30 to 65 years old) would be just over $311,165.

Now you're probably thinking, "How much is the cash value making?" Even though the nationally known insurance company did not give out the rate of return in their quote, all cash value policies have a horrible rate of return. Just a little better than CD rates (which are between 1.05% - 1.35%). So I gave it (this is a guess on my part, not factual) a 3% rate of return. For the same 35 years, it would be just under $64,736. A difference of $246,429. So which one would you pick?

Part 3

Again, I hate to leave off on sort of a cliffhanger, but there is still 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 23rd.

Hey, If you haven't done so already, check out our Facebook page. I share all kinds of money tidbits there that you may find interesting. Hope to see you there!

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.

Hey, If you haven't done so already, check out our Facebook page. I share all kinds of money tidbits there that you may find interesting. Hope to see you there!