How to Buy Life Insurance in Later Years

The death benefit of a life insurance policy provides an income-tax-free lump sum to your spouse or heirs at the time of your death to help pay for final costs.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Financial Calculator
• Personal Financial Software
• Life Insurance

Find Out if You Need More Insurance

1. Carefully search your records and files to determine if you have any permanent life insurance in force.
2. Total the dollar amount of death benefits (face value of policies) your spouse and/or heirs will receive at your death by virtue of the policies.
3. Calculate the amount of money you believe will be necessary to pay for your final expenses, such as burial and funeral costs, and any medical or long-term care expenses that you feel might not be paid off until after you die.
4. Subtract that amount from the total death benefits of any existing life insurance policies.
5. If the result is positive, your survivors will have enough money to take care of your final expenses, and you don't need to purchase additional insurance.
6. If the result is negative, consider purchasing additional life insurance to cover those costs.

Applying for a New Life Insurance Policy

7. Find a competent life insurance agent who specializes in life insurance for senior citizens or those with medical problems ("impaired risk").
8. Apply only for the amount that you feel you need to cover final expenses and unpaid medical costs.
9. Give the agent the complete names, addresses and phone numbers of all doctors you have visited over the last 10 years.
10. Take the required medical exams and submit the lab specimens for underwriting your application.
11. Write a letter to the insurance company asking that the results of your exam and lab work be sent to your primary doctor; give this to your insurance agent to send for you.
12. Carefully consider the offer you receive from the insurance company at the end of the underwriting process - usually six to eight weeks - and get a full explanation of any part of the offer you do not understand.
13. Accept the offer and tell your agent to have the insurance company issue you your policy.
14. When the policy arrives, go over it carefully with the agent. Make sure you understand the policy's benefits and limitations.
15. Pay the premium to put the policy in force.

Tips & Warnings

• If in doubt about whether a life insurance policy is still "in force," call the home office of the insurance company and ask for Policy-Owner Services. Tell the service representative the number of your policy - usually found on the cover of a policy - and ask what the current death benefit is.
• Don't apply for new life insurance until you are sure you know how much you currently have.
• Don't be deterred from applying for life insurance because of your age or medical condition - many insurance companies specialize in coverage for the elderly and a good life insurance agent will steer you to those companies.
• Ask for a sample or specimen policy to read before you apply or while you are waiting for the company to make an offer on your application.
• You have a period of time (varies by state and/or your age) to look over an issued policy. It's called a "free-look," during which time you may return the policy for a full refund of any premium paid if you decide not to take it.
• Be careful of offers for life insurance that indicate "no medical exam is necessary" as many of those offers do not offer much coverage and the cost of each insurance "unit" or dollar amount can be very expensive.
• Term insurance is usually not available to applicants over 70.
• Don't be coerced into making a partial or whole premium payment as part of the application unless you want the conditional coverage that goes along with it.