Terminally ill? But you may still get life insurance!
Jun/091
Becoming terminally ill isn’t the end of your insurability for the insurers anymore, at least the situation has improved over the time. New medicines have ensured longer life for many critically ill people and the insurance companies too have receognised this fact by extending life coverage to them.
But, what would you qualify for?
Though there is a change in the situation, but you might not still qualify for the standard life insurance policies. What most people with chronic health condition would qualify for is a guaranteed issue policy.
What is guaranteed issue policy?
The guaranteed issue policies are basically no medical underwriting policy, i.e. you neither have to reply to the health related questions nor have to undergo medical tests to qualify for the coverage.
Often guaranteed issue plans are rated higher than the standard life insurance plans but it is a good alternative for people with health issues and seniors who otherwise won’t qualify for life insurance.
These policies, however, have lower death benefits. One may get only upto $50,000 coverage with the guaranteed issue plan. Therefore, it often doesn’t make a good bargain for standard lives.
It might have occurred to you that insurance companies would lose a lot of money by insuring terminally ill people but the situation is little different. The guaranteed issue plans have several restrictions imposed upon it to prevent the insurers from losing money.
Longer waiting period
It has longer waiting period, may be 2 to 3 years, i.e. if the insured die within the first two years of the policy then only the premium paid would be refunded instead of death benefit. Therefore, if you are in good heath you may consider getting policies which would offer immediate death benefit.
Very high premium rate
The premium rate is very high. A policy of $25,000 death benefit then perhaps would cost $2400 in terms of premium each year. So, apparently at the end of the 10th year the premium paid would become equal to the death benefit.
Life insurance options for seniors
Mar/090
As we grow old our options with life insurance become scarce. Many insurers still avoid insuring individuals over sixty years of age. Further, even if you find an insurer who would offer you a policy the premium charged on that would be outrageous. So, are you uninsurable?
Certainly not, though the options are limited you can still find life policy that would offer required coverage. Currently, many insurers are setting separate underwriting guidelines for the seniors to qualify for life insurance.
However, even when the seniors may qualify for the traditional life insurance, the cost of coverage would still remain their concern. Therefore, we need to identify the alternatives available to them, which could allow them to remain covered at reasonable expense.
Funeral/final expense plans
Final expense policies are typically designed to cover the burial expenses. Normally, issued for limited face value. The final expense policy would accumulate cash-value which the policy holder can leave behind for his/her heirs.
The followings are the advantages with the FE policy,- The premium rate would remain constant for the period of the plan.
- It would accumulate cash-value, which you can leave behind for your heirs.
- The coverage offered by the plan is permanent.
Guaranteed issue life insurance
Anyone can qualify for the guaranteed issue life insurance since it requires no medical underwriting. However, these plans offer lower death benefits than the traditional life insurance plans. But the premium that the insured is required to pay is high. Moreover, some guaranteed plans might have the clause that would restrict the benefit pay-out if the insured dies within 24 or 36 months from the commencement of the coverage.
Premium financing
In premium financing large financial institutions finances the plan taken by the senior. The financier expects to get higher return on these policies than the traditional investment vehicles.
Premium financing requires no out-of-pocket (or nominal) expense from the policy holder. If the insured dies within the tenure of the plan, the investor then would get the premium paid by him refunded along with interests, when the beneficiary of the policy would receive the tax-free death benefit.
Life settlement
Life settlement is an option that would allow the seniors to get rid of their unwanted life policies. Life settlement involves selling the policy to a third-party, where the third-party would become responsible for paying the future premiums.
In the agreement of life settlement the seller receives immediate cash while the buyer becomes the beneficiary of the plan.
About Juanita
Juanita is an active community member of ampminsure.org. She enjoys helping the community with their insurance related queries. She is a financial writer, enjoys writing over various financial issues, having her web presence across the web world.