Reasons of Higher Life Insurance Premium for Seniors Over 65
Looking for an Affordable Policy?
Until a few years back it was most commonly believed that while people get older, they don’t require too much money as they would have saved enough to live a comfortable life. With changing times and ever growing demand of money in our day to day lives, the elderly and retired people have started realizing the need of money in an elder age too. Having understood the need for financial security of the dependents of such elderly people, insurance companies have introduced life insurance for seniors over 65.
Why Seniors Need a Plan?
Many people at an elderly age have started opting for life insurance policies. There are various reasons that make them do so:
To strengthen the financial condition of their dependants (especially spouse) and family even after they demise.
To have a life of dignity and be able to contribute to the family funds and savings.
To be self-sufficient (having earned the whole life)and a deep desire to assemble the money for their last rites on their own.
To be able to pay off their unfinished debts even after their death, so that the family doesn’t have to carry their memories like a debt-burden.
These are the some of the cited reasons that people have shown a keen interest in taking life insurance policies for themselves over the age of 60-65 too!
While it appears to be a golden opportunity for insurance companies to tap into a whole together new segment of customers, there is a risk that comes along with this opportunity. The companies anticipate the life expectancy of such customer segment to be much lesser than anyone who is befitting their medical test eligibility. In order to compensate their risk, they have made some amendments in these policies to customize with the life insurance for elderly parents over 65.
However, it is considered a general view that people are living longer in these times. Accounting to these views, people who take term policies (a policy with a limited time period) generally enjoy the benefits of the matured policy returns.
Along with the above-said pros, there are some cons as well that are associated with the high age factor for insurance policies. One of them is “the higher amount of premium to be paid!”
Major Reasons of Higher Premium
Age plays a vital role in deciding the premium amount and term of the life insurance for seniors over 60. Let us discuss here some of the reasons of higher life insurance premium for seniors over 65:
The more is age, the higher is premium
The premium for an insurance policy is decided by its term. For example, the term of the policy is 20 years, while the policyholder is 65 years old, the amount of premium to be paid will automatically rise. Given to the reduced life expectancy condition, the company would not take a risk of the medical claims and other benefits of the person unless they have received a good amount of cash from their client in the form of premium. Thus it is believed that every year you spend without insured is getting your premium to be expensive.
In deciding the terms of life insurance policies for people over 60-65, either the company removes the clause of medical benefits to the customer if needed or they may have to pay a very hefty amount for the medical claims that are much obviously expected to rise at that age.
Reduced Income Source
As the sources of income get reduced at an elderly age, the amount of savings or retirement funds also starts depleting. Most of the insurance companies understand this. While making an estimate of their premiums, they will ask you to disclose your assets and source of income. They want to make sure that maximum amount of premium gets paid at the earliest for the senior citizens because once they get settled in their normal routine of life, there are chances of unaccountability of money that will be spent. The funds in such policies are very much transparent and calculable.
Higher the returns, higher is the premium
We can correlate it to the term of the policy, if the client expects higher returns at the maturity of the policy or a bigger lump sum of money after death for a whole life policy, they will have to pay a higher amount of premium.
How to choose a perfect life insurance policy over the age of 60?
One thing that should be known by the people over 60 years is that there are many companies that offer policies until the maximum age of buying life insurance. So there is no need to rush and make hasty decisions. At the same time, taking too much time can be a little risky as well in terms of higher premium amount to be paid. Therefore, it will be better if the people decide upon their policies over 60 before hand. Just like people prepare for their retirement pensions, they should prepare for retirement policies too.
The points to be considered before buying a policy
Compare prices and make sure that you get maximum benefits at minimum cost.
Talk to various agents and be ready with your questions and calculations so that you can estimate how much beneficial is the policy going to be.
Keep the documented details of your health and age handy. Try to maintain a good and healthy lifestyle that will not only give you a better life but also make you enjoy the benefits of life insurance.
Do not wait for years. If you have made up your mind to take an insurance policy over 60 years of age, go for it at the earliest you can.
Having known the reasons of higher life insurance premium for seniors over 65, we can make a cautious decision and buy a policy that assures good returns in lower premium rates.