1 July 2014 0 Comments

Something for Everyone Ages 45-85

shutterstock_161067515Recently I received a mailing addressed to me as a member of the Auto Club.  My wife and I were offered life insurance and we didn’t have to take a medical exam and there were no health questions asked.  Within the 5 pages of fine print it was stated that the policy would be renewable for life, the premium would never go up, the death benefit would never go down, the policy built cash value and there was a 31 day risk free trial period.  All of this is true and we could each get up to $20,000 of coverage.

There was a lot of hype about the high cost of funerals in the United States and in the boldest print to be found within the letter was the statement, “We’re Recommending It for All Members Aged 45-85.”  Boy, this must really be a great policy to make such a broad statement!

However, as you read on you saw that “If you suffer a non-accidental death within the first two policy years of coverage, your beneficiaries do not get the full amount but, instead, get 100% of the premium you paid, plus 10%.”  Of course there had to be a catch for their promise to insure everyone ages 45-85.  Then you take a look at the monthly premium and you began to wonder how they could recommend this policy for all members. Here’s the monthly premium for a $20,000 policy:

            Age                                         Male                                       Female

            45-59                                       $ 94                                         $ 69

            60-64                                       $102                                        $ 82

            65-69                                       $125                                        $ 98

            70-74                                       $166                                        $132

            75-79                                       $225                                        $176

            80-85                                       $300                                        $248

Is this still such a good deal.  That depends.  If you are a male age 80-85 and are in terrible health you would have to live for more than 5 ½ years before your total premium exceeded the death benefit.  So, if the likelihood of living that long is remote, this policy might make sense.  If you are in good health you could get a policy for a whole lot less than these premiums and you wouldn’t have to wait for two years for the full death benefit to kick in.  And then there is the question, do you need a final expense policy at all?

Talk to an independent insurance professional who would never recommend that one particular policy is best for everyone, because that can just never be true.

Coming up I’ll be de-bunking more never buy and always buy statements made by some agents.

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