One of the most common questions we hear from clients age 60 and older is, “How do I get a good deal on life insurance now that my term has expired?”
With every financial advisor telling you something different, how do you know whom to trust and which policy to choose?
What most clients are shocked to learn is that after the age of 60, term life insurance may actually be more expensive than a policy that provides the exact same level of coverage until the age of 90 or later.
Quick Article Guide:
1. Let’s Start with a Real Life Example
2. What is Guaranteed Universal Life Insurance?
3. Benefits of Guaranteed Universal Life Insurance
4. Life Insurance for Pension Maximization
5. Life Insurance for Financial Freedom After Retirement
6. Life Insurance as Cash for Estate Taxes
7. What’s Our Secret?
Robert is an actual client of ours. He is a 62-year-old man in the “Preferred” rate class, equivalent to “very good” health. Robert is about 15 pounds overweight, and takes blood pressure and cholesterol medications. With these medications, his blood pressure and cholesterol levels are considered “well-controlled.”
When Robert first called JRC, he asked for quotes for a 25-year term life insurance policy with $250,000 of coverage. This insurance would provide life insurance until he reaches 87 years old. After conversing with Robert, we realized he was an excellent candidate for a guaranteed universal life (GUL) policy. We’ll explain exactly what that means shortly.
With a GUL policy, we were able to help Robert secure $250,000 worth of coverage until age 90, for less money than a term life policy expiring three years sooner! And, for just a few more dollars per month, he even had the option to secure coverage to age 95 or 100. Happy to save more than 10 percent on his monthly premiums, Robert stuck with the policy that guaranteed his coverage to age 90. He then asked if we could help his wife buy life insurance, too.
Robert’s wife is a breast cancer survivor five years past her final treatment. By matching her to a highly rated insurer specializing in this breast cancer risk, she was approved at a “Standard” risk category rate. She also chose the GUL policy option to extend her coverage to the furthest age possible while remaining in her budget.
To this day, Robert continues to adamantly refer people he meets at his social club to JRC, as we specialize in underwriting for those above the age of 50 who are in fair to excellent health.
Now that you see the potential savings in guaranteed universal life insurance, let’s talk about how it works.
If you are like many of our clients age 60 or older, you’ve had term life insurance in the past, and it has since expired, or your term policy is getting ready to expire. If this is the situation you are in, you’ve probably received a notice that your rates are about to skyrocket. Your next policy should be your last policy, as it becomes increasingly difficult to re-qualify for life insurance as you age, and your health is not guaranteed to remain insurable.
If you need coverage for the rest of your life, a guaranteed universal life (GUL) policy provides a happy medium between a term life insurance policy and a whole life insurance policy. Guaranteed universal life insurance policies are similar in cost to term life insurance, but rather than providing coverage for a certain number of years, your policy is designed to last for the rest of your life. With a guaranteed universal life insurance policy or a GUL, you can guarantee your rates and coverage to a specific age. A GUL policy will allow you to lock in your policy until the age 90, 95, 100, 105, 110, or even 121.
If you’re not sure how long you should guarantee your life insurance coverage for, you can visit the Social Security website’s lifetime expectancy calculator here, we usually recommend extending your insurance policy for 5-10 years past the age displayed.
Despite the implication of its name, guaranteed universal life insurance (GUL) is not universal life insurance and does not build cash value. This allows you to keep your monthly payments low. Additionally, GUL does not carry the expensive management fees of universal life insurance.
Here’s why we’re big proponents of guaranteed universal life over non-guaranteed universal life:
- Your cost of insurance will not change, even as you get older or if your health changes.
- Your coverage isn’t tied to an investment. You pay for the life insurance protection only, just like term life insurance.
- You aren’t pouring extra money into your policy. Trust the financial experts on this: you’re better off putting your money into a savings account or perhaps paying down your mortgage.
- You will pay less up front. Guaranteed universal life insurance is a fraction of the cost of non-guaranteed universal life.
- You don’t run the risk of losing coverage from unfavorable investments or changes in the market.
- You don’t have to pay annual investment fees of 3% or more per year that reduce your investment’s return.
If you are approaching retirement and considering whether to take your full pension or the reduced spousal benefit, life insurance can be a means of “having your cake and eating it, too.”
Using a strategy called pension maximization, you can supplement your pension with life insurance to accept the full payout while still providing financial protection for your spouse and family.
If your single pay pension offers $4,500 per month, taking the spousal benefit might drop your monthly payout to $3,500. Life insurance, on the other hand, can provide the same peace of mind and perhaps even a larger death benefit for, say, $300 per month. So, by accepting your full $4,500 per month pension and buying life insurance separately, you are putting $700 more in your pocket each month ($8,400 per year) compared to the spousal benefit.
Think something like this might work for you? JRC has created the only pension maximization guide you’ll ever need.
After you’ve retired, spending your savings can cause a great deal of anxiety, because you want to be sure that you’re leaving money behind for your spouse or heirs.
We often advise clients over age 60 to leverage a guaranteed universal life policy as a legacy so that they can spend their retirement funds knowing that the insurance will pay a death benefit to their family.
This is a great way to lead a “bucket list” lifestyle and make the most out of your golden years. What really makes this strategy a frequent no-brainer is that unlike your retirement savings, a life insurance death benefit is paid to your family tax-free. As you’re probably realizing, the difference between passing down a taxed and untaxed legacy can be massive.
To learn more about how life insurance can allow you to live and spend more freely during retirement, check out our previous article on the topic: Spend Your Retirement Savings and Still Leave a Legacy, Tax Free.
If you own a large estate, you likely want your heirs to be able to keep all of the assets you’ve worked so hard for. In order to do so, they will need an influx of cash to pay the estate taxes due on your property after you die. Enter life insurance, an “estate tax buffer”. Permanent life insurance is commonly used by affluent families to reduce or avoid potential estate taxes that would otherwise be levied against your assets/estate after you pass away. These taxes must be paid within 9 months of your passing to prevent the IRS from seizing the assets you intended to leave behind.
Clients call us every day with questions about estate and inheritance taxes and we can help. Give us a call at: 855-247-9555 or visit our visual guide and estate tax calculator to tell you everything you need to know about estate planning with life insurance.
How does JRC get so many rave reviews from clients? We match people with the best life insurance options available to them by shopping 40+ top-rated life insurance companies and hundreds of products. Our agency is owner-operated and all of our licensed agents have multiple years of experience in the insurance industry.
We have an extensive background in handling pre-qualification underwriting for all of the top-rated life insurance companies and this experience allows us to provide accurate quotes for you right over the phone. By answering a few questions about your health and lifestyle, we’ll be able find your best options for life insurance in minutes.
At JRC Insurance Group, our primary focus is life insurance, meaning we’re not looking to “cross sell” you auto or health insurance. We focus on financially protecting your family with quality life insurance at the most affordable rates you will find. Call us toll free at 855-247-9555, or click on the button below for an instant free life insurance quote.
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