Term for Age 65+

[SD1115]

why not just look into a custom whole life?

 

[axeman462]

Although not a direct answer to your question, you have me a little concerned here. What is the purpose of the insurance? In a fairly limited set of circumstances does a 20 year term product make sense for someone 65 and older. Although I'm not aware of any noteworthy cases where an agent has been sued for selling a product that isn't suitable, that may be the direction we're heading. It may not be as egregious as selling an 83 year old an annuity with a 15 year surrender period, but nearly as concerning. If the insured loses coverage at 87 and dies at 88, do you think the family isn't going to be upset about that and look for a way to deal with their anger from not getting a payment on the insurance policy he paid for "all those years"?

ok, I'll bite.
I'll guess i'm not not nearly as experienced as you, as I have only been in the industry for little over a year. And i truly want to do right by my clients.
So this is a situation that I come into every now and then:

A middle class husband and/or wife needs life insurance. lets say $100k, to pay off the mortgage, or other debt, or maybe even spousal support for a few years. whatever, the case may be, they have a need for at least $100k.

they clearly cannot afford a whole life or universal life policy.
A male 65, std. with RNA would be $317/mo for WL and a UL would be about the same.

I start talking about premiums in that range to a middle class couple and they will call me crazy. A 10 yr term for the same amount is about $90/mo. But a 10 year term is not long enough, it would expire at age 75 leaving them uninsured, and in a place where premiums would be more than twice the price than it was at age 65, and possibly uninsurable because of their health. I could not do that to someone, and will not. My thinking is a 20 yr term would be around $180/mo for $100k, and would be more appealing to someone, because it would bring them to the age 85 (statistically, people live to be around the age 80). Now, in a case like this, I might even suggest to combine it with a small final expense policy incase they outlive the term, this way they have something, at least to pay for a funeral.

I dont, know though. Which is why I'm here, if you have a better idea, or better product, please share it. Because what i am seeing is WL for larger amounts like that for someone age 65 or older, is unaffordable for many people, but the need is still there.

 

[Josh]

If they truly have a finite need, then that's absolutely not a bad idea. Most products are a good fit in some situations. I have a difficult time thinking of many situations where a 20 year term is a good idea on someone that old. The premiums between that and a UL aren't often that much different because the carriers are insuring very similar risk.

If the goal is really to have the house paid off one way or the other, there is some merit to that. If they can barely afford the house anyway, what happens when there are major repair bills. That's why we see a lot of seniors living in old houses that are falling apart around them. They are emotionally attached to the property and don't want to give it up. That's also ignoring that once the spouse dies, they are going to likely have a reduction in their income which is going to make those monthly expenses even more difficult to deal with. I suppose my point is that even in this situation where you see it might make sense, you're still looking at a situation where the client is clearly making poor financial decisions. We all make at least some bad financial decisions and if it's what they client wants after understanding their situation then great, but odds are they need enough to bury their spouse and some extra to give them time to sell the house before they can make their next step in life. There are 100 different ways the situation could go, but that's the most likely.

Be sure to check the GUL rates vs term.