Choosing the right life insurance can be overwhelming, especially as a senior. Your financial responsibilities have changed, and you may not be sure about what policy is right for your lifestyle. That's okay! You've already started the first step by researching online. Once you've finished your research, the next step is to call trustworthy companies and talk to their agents about what your best options are. Here are 5 questions you should ask your agent when renewing or changing your life insurance policy.
Is This the Right Coverage for My Family?
When you first set up your policy, you probably needed a higher life insurance policy to support your family after your passing, but as a senior, do you have the same needs? Calculate whether you are over- or under-insured by examining what bills will need to be paid after your death and whether your spouse or family will need a financial cushion.
If you decide that you no longer need your high-value plan, you don't necessarily have to switch to a different policy. Many companies allow a one-time decrease in the value of your policy.
Is This the Right Plan for Me?
There are three main life insurance plans: term, whole or permanent, and guaranteed universal life insurance.
Term life insurance guarantees coverage for 10, 20, or 30 years. When you renew at the end of your terms, your rate goes up. Many companies limit the terms for seniors to shorter time periods and place higher premiums on plans as you get older.
Whole or permanent life insurance covers you for your entire life. These plans are the most expensive and more complex (they can include investment attachments that grow the policy payout), but the premiums remain steady.
Guaranteed universal life insurance covers you until a specific age. The premiums remain steady and are generally less expensive than permanent life insurance because the policy payout does not increase over time.
Seniors are at risk for rate hikes, so if you have the option between renewing and choosing a different plan, go over all your options with your agent and don't be afraid to shop around to other providers to find the best insurance for you.
Are There Living Benefit Riders?
If you have a permanent policy, then you may have access to the payout before you die. Many companies offer living benefit riders that allow you to use your benefits to pay medical bills for a terminal illness or other personal care expenses. Using your living benefits rider or other optional riders will decrease the amount of your final payout, but can help ease the financial burden on your family as they help care for you in your illness.
Is This Policy Convertible?
You may decide to go with a short-term life insurance policy, but you should ask if you can get a convertible policy, so if you outlive the term-limit on the policy, you have the opportunity to convert it to a permanent or guaranteed life insurance policy as you get close to the end of your term. This type of plan may be more expensive, but it should also prevent a significant rate hike at the end of your term.
Are There Any Discounts?
Most insurance companies have discounts, but they don't openly offer them unless you do your own research to find them on their website or ask your agent outright about the discounts. Remember to ask so you can get the best rate.
As you renew a current policy or look for a different one, it's important to shop around to different providers. Companies know that people don't like the hassle of switching providers, so they feel comfortable raising your rates. If you threaten to switch or even do switch providers, you are likely to get a better rate on your insurance.
You should also ask an expert. Life insurance is complicated, and many people are overwhelmed by the options. Agents can help you make sense of the options, but it's always best to talk to several different well-respected companies to compare their responses. If you have complicated finances, you should consult a financial planner to decide what life insurance plan is best for you and your family. You may even find out that life insurance is not the right option for you.
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