Getting Life Insurance on a Senior Parent or Grandparent in Poor Health
We have often received calls from, mostly, desperate children of seniors who had just found out that their elderly parent(s) did not even have life insurance to take care of final expenses. Children understand that, the fact that their parents or grandparents are older; may mean higher premiums for the insurance coverage. What many do not realize is that age is a relatively small factor in the cost of life insurance. Probably, the biggest factor is health. To keep cost in check we recommend the following.
Not all health problems are a big problem
As people get older, some of the diseases that may have great negative effects on younger people may be considered more minor with seniors. Take diabetes for example. If someone is diagnosed with diabetes before age 40, rates on their insurance (if approved at all) may be higher than for someone in their 60s! Depending on the type and prognosis, even cancer can have a lesser effect on a senior's insurance rate than on a younger individual. So, just because your parent is not healthy does not mean he or she will get heavily penalized and have to pay very high premiums. Give the insurance company all information on your parent's or grandparent's health history and ask them to give you an idea of what the rates may be and what options are available.
How about big health problems
If your father or mother does have more serious health issues, and you need a larger amount of life coverage ($100,000+), speak to at least three insurance companies or three agents that represent different insurance companies. Note that we did not say just three different agents but three different insurance companies. What would be the point of speaking to three agents if they represent the same insurance company? Gather all information from your mother or father and, as long as your mother and/or father are OK with it, share that information fully with the insurance companies. Each company should come back with a different possible outcome. Once you have possible final rates, select two of cheapest and apply to both making sure that each company knows you are applying with multiple carrier. Note that that underwriting can take weeks. The wait should be well worth it though as you are more likely to get better rates.
If all you need is a final expense plan such as a whole life for $20,000, the process should even simpler as, usually, no exam is needed and underwriting normally takes a few days. There are many companies that offer these types of plans and their simplified process can vary greatly. Since the process is simpler, it will also be easier to narrow down your choices. With these plans, we would highly suggest that you shop five companies. Give them your medical history, ask them what you can qualify for (which they should know right away), ask them about plan details such as rate guarantee period, is the face value level or graded or modified. Also, request company financial and customer ratings information and a brochure. Once this information has been gathered, simply select the cheapest plan that offers the best and most benefits.
In worst health cases, a guaranteed issue life insurance may be your only choice. These types of polices do not ask any health questions and everyone usually qualifies. Rates are very high though. I would explore all other above options carefully before selecting a guaranteed issue life plan. Some may suggest that instead of these types of policies you might as well get a very cheap accident only life insurance but we do not agree. Accidental life insurance pays only in case of an accidental death and the likeliness of an elderly parent dying in an accident is very remote - unless, of course, they sky dive or mountain climb as a hobby.
Let your parent(s) fill out the application
Parents can be very secretive when it comes to their personal health. In all situations you want to make sure that your parent fills out the application themselves. When they see the health questions on the application it may remind them about some health problems they have not thought about. Some people think that too much detail on an application can raise their potential insurance rates but that is not usually the case. In many cases, we have seen that details on an application actually helped as the insurance company was able to make a more educated decision and decide to give you a lower rate than they would otherwise have. They will certainly feel more comfortable that you are not trying to hide anything and penalize you because of lack of trust.
We hope that his article has been helpful. Please look for us in other articles that may further help you in your search. We wish you well. Always feel free to ask us questions too.