In all the years I’ve been in this business you’re the first person who has asked me this question. I had to do a little research to answer it, and this is what I found.

Somewhere around 5,000 B.C. when the Chinese shipping industry was still quite young, it was relatively common for sailing vessels to be lost at sea. At that time most farmers in China relied on boats to transport their crops to other markets. They wisely took a simple measure that insured themselves against unexpected catastrophic situations. In order minimizes their risks and not to lose everything if the ship went down they spread their crop among a several ships.

This way if one did sink they would still be able to realize enough of a profit to feed their families and keep a roof over their heads.

In another part of the world, at another time, the people of ancient Rome wanted to insure that they would get a proper burial. Citizens who did not have enough money to ensure that they could be buried when they died joined a burial club called a “Fratre”. New members of the club had to pay an entrance fee, donate a certain amount of wine, and make monthly payments. Payments were made at monthly festivals where the members ate, drank, and performed sacrifices.

If a member did not pay their dues for six months they weren’t allowed to make a burial claim. Also those who committed suicide would be buried in a separate cemetery from others in the community. Their families couldn’t make claims for the financial assistance that was available to other members of the club.

Later, in the 13th century, the ancient Babylonians devised one of the earliest forms of insurance in recorded history. Affluent individuals offered a guarantee to merchants who shipped their goods that they would not lose any money if the ship sank. In return the merchants agreed to exchange a percentage of the value of their cargo for this protection.

Over the course of time these ideas evolved into the various insurance products that are available to almost everyone today. One thing that hasn’t changed, though, is that when people have insurance coverage their peace of mind makes it easier for them to sleep at night.

I hope this helps answer your granddaughter’s questions.

Mike

That’s a very good question. If you’re thinking of buying senior life insurance then you may be among the millions of people that have been so adversely affected by recent economic events.

Many people, both young and old, are now in some pretty precarious financial situations. They probably never would have imagined that they could have so much trouble dealing with credit card bills, car loans and unpaid mortgages in addition to their everyday costs of life, such as food and shelter.

You, like so many others, may be worried that you might not be able to pay for your children’s or your grandchildren’s future education – or even your own medical bills and, of course, there is also a cost that goes with dying.

I don’t think that most people know, but the average funeral cost more than $6,500. Social Security only provides $225. That is a pretty big difference that your loved ones will be expected to pay.

So, what can a senior citizen do to protect whatever assets they may have and yet still have enough money to take care of their final expenses?

One answer is that you can get a senior life insurance policy. There are a wide variety of affordable plans and options to choose from. You can find one that will fit your budget and give you the protection you’d like.

For example, if you are a senior citizen and you don’t want to burden your family with your final expenses then you can purchase the amount of senior life insurance that will cover the costs of your funeral and your burial. The monthly premium will likely be less than the cost of a meal at a fast food restaurant.

Even if you are fortunate enough to be able to provide your family with a substantial nest egg, the probate process will freeze your assets for between six to eighteen months. During that time your loved ones may be responsible for having to pay for your outstanding debts along with some of your other expenses.

If you decide to purchase a senior life insurance policy you will be happy to know that there aren’t any restrictions on how your beneficiaries can use the money. In most cases, they will receive these tax free funds within a couple of weeks. This money can then be used for your final expenses. This way they will not have to take anything out of their own savings or go into debt to take care of this responsibility.

It is very easy for seniors to qualify for this type of insurance. There aren’t any medical exams that need to be passed. Many online insurance companies only require that you answer some basic health questions in order to get your policy.

Mike

That’s a great question. And you’re absolutely right – term insurance is actually the most affordable way to purchase substantial death benefits.

If you’re wondering if the insurance companies use a different method to calculate the cost of insurance for term instead of permanent assurance you can relax because insurers actually use exactly the same mortality tables to calculate the cost of insurance as well as the death benefits.

And, as long as the premiums for either type of policy are current and the policy is in force when the policy holder passes away, all the death benefits are income tax free.

But there is are a number of reasons why term life insurance policies cost substantially less than permanent life policies.

One reason is that a term life insurance policy will provide you coverage for a limited period of time. Often the term of coverage is for 10, 15, 20, or 30 years. The premiums you will pay for any of these terms will remain the same for the duration of your coverage.

The actual cost is based on the total cost of every year’s annual renewable term rates with an adjustment made for the time value of money. Therefore, the longer the term of the policy, the higher the premium. That’s because as people get older it is more expensive to insure them. And all of this is averaged into the cost of the premium.

However, a term insurance program could very well expire without the insurance company having to pay out any claims. That’s primarily why they are so much lower in cost.

Studies done by the insurance industry show that this is a very attractive program for them to offer because there is a very low probability that death benefit claims are made for term insurance policies. One study showed that the probability of an insurance company paying a benefit is as low as one percent.

However, because permanent life insurance programs last for “a lifetime”, at some point in time the insurance company will absolutely have to pay out death benefits.

Hope that answered your question.

Mike

On the surface it would seem that a life insurance company should require you to get a physical exam before they offer you coverage. However, with increased competition, mainly due to the Internet, “no medical exam life insurance” is available.

And if you apply for this type of cover you will not have to go to a doctor to get a medical exam.

But you are asking a very valid question. Why would life insurance companies ask you to complete a physical examination as part of the regimen you need to go through if you want to qualify for a term life insurance policy?

When you look at it from the insurance company’s perspective the answer is actually quite obvious. In order for the insurance company to rate you and charge premiums that are in line with your actual health status they will need some sort of verification. And a medical exam will do exactly that.

Because of this, having a medical exam can often save you money for your life insurance policy.

But if you don’t want to go to the doctor but do want a more convenient approach that could cost you a bit more money then you should investigate no medical exam life insurance.

Often, just by answering a few health related questions with a simple “yes” or “no” you will be able to get up to $50,000 in insurance coverage. The entire process can be handled through the mail and not only won’t you have to get a medical exam, you won’t have to fill out any long forms as well.

Getting life insurance without having to take a medical exam is a hassle free way of getting coverage that could pay for your mortgage, your unpaid credit cards, your car loans, and more should you pass away. And filling out simple form eliminates having to go through the drudgery taking hours to fill out a lot of unnecessary paperwork.

This type of policy is usually more expensive because the insurance company assumes additional risk by relying on you to provide information instead of getting documented facts from a medical professional.

It actually makes a lot of sense that they would charge higher premiums for no medical exam life insurance than they would charge if you underwent a complete physical exam. None-the-less, online insurance coverage without the need for a medical is available for rather affordable premiums.

Some companies offer a $1 trial and then adjust their rates based on your age – and then they guarantee those rates for the life of the policy. Other online insurance companies offer rates for as little as $3.49 per month for this kind of insurance.

The amount of no medical life insurance coverage you can purchase varies between $5,000 and $50,000.

Mike

Congratulations on your anniversary and I’m glad that you’re considering buying life insurance. You’re asking a very good question.

Up until recently anyone who wanted to get a life insurance policy had to go through a predetermined series of steps that included getting a physical examination. The examination’s purpose was to prove that the person who wanted to invest in the policy was in good enough health to be insured. That was because, as smart business people, insurance providers didn’t want to take any unnecessary risks.

If you weren’t in good health it would be more likely they would have to pay your insurance benefits before the company would turn a profit, so, understandably, they wouldn’t insure you.

But, since the Internet became an everyday fact of life, you can get almost any type of insurance policy that you want online. And, with increased competition, a number of plans that were not available before, such as life insurance no exam policies, are now available. This insurance policy does not require that you have any physical exam whatsoever.

Keep in mind that most of the no exam life insurance policies are term insurance policies. This means that they are only in force for a specific amount of time. And when that time has elapsed, depending on the policy, you might or might not have the option to renew the policy. If you are able to renew it, the premium would probably be higher.

If you decide to invest in a life insurance no exam police make sure to get a guaranteed renewable plan. This will make sure that you will be able to stay insured once the original term insurance policy ends, even if your health should change in the interim. But you have to figure that the rates will increase and it’s also possible that there may be additional stipulations.

Even though you will be buying life insurance – no exam – you may still need to give a blood or saliva sample. However, beyond that, you will not have to see your doctor.

The nature of the policy precludes any additional stress in your life as well as the additional cost of having to take a physical exam. And you will not have to deal with any long waiting period while the insurance company decides if you are a good enough risk for them to insure.

In general the younger you are the easier it is to get a no exam life insurance policy. Once you have turned forty years of age there is a good chance that you will be asked to pass an exam that may include a basic physical, a urine test, blood work, and perhaps a stress test.

Mike

I’m sorry that you had to cash in your insurance policy. But isn’t it good that you had it protecting you through the years and that the cash value was there to help you when you needed it?

Now, to answer your question, yes there is burial insurance available. And the good news is that it’s an insurance policy that you are guaranteed to get.

Sometimes called “final expense” insurance, it’s a type of insurance policy that you could custom design to take care of all of the expenses involved when the end comes. I guess because of the economy that this alternative type of insurance has become very popular in recent years. More and more people are finding themselves in similar situations to yourself.

People who purchase burial insurance can pre-select whatever they want at their funeral. They can decide on the type of casket, the number of cars, any service accessories, and more. Once you have made your selections the funeral director will add up all the costs. And you will often get a guarantee that the costs will not go beyond the face value of your policy.

When you purchase the policy, it won’t be necessary to get a medical, health, or physical exam. Then, when the insurance is in place, it will take care of your final expenses so that your family will not have to deal with them. They won’t even have to deal with the paperwork because the benefits will go directly to the funeral home as well.

Another type of burial insurance is also available. If you choose to buy this type of policy you will simply choose a face value for your funeral. This would be a cost that you do not want exceeded. Then, when you pass on, the benefit first goes to the funeral director. However, if the face value is greater than the cost of the funeral, any money that is left over will go to a contingent beneficiary.

If you would like this type of policy you make sure to ask for the policy to include a provision that excess funds will go to your beneficiary. That’s because most funeral directors will assume that they will get the entire face amount regardless of the cost. In order to have the option of a beneficiary receiving any excess funds you will have to have that option written into your policy.

The reason burial insurance is usually easy to get is because the underwriting guidelines are considerably more lenient than for term insurance or whole life insurance policies. None-the-less, you will still be asked some questions.

Then, if your health will not permit you to get whole life burial insurance then you will still be able to get a graded benefit life policy. However, with the graded benefit you will have to live at least two years before the total of the face amount would be paid.

If you should pass away within those two years then your beneficiary will receive the premium you paid plus interest – unless you have died as a result of an accident. If that’s the case your beneficiary will receive the entire face value of the policy.

Graded benefit policies are “guaranteed issue” insurance policies. You cannot be turned down. Although they are a bit more expensive than a regular final expense insurance policy they are still less expensive than traditional life insurance policies.

Mike

Great question. On the surface it would seem to make sense to get the cheapest insurance product available. Then you could have more money for other things. But things aren’t always as they appear to be.

Sometimes the cheapest policy is definitely not the best policy. That’s when it isn’t being offered by a reputable life insurance company.

You definitely will want to make sure that the company you bought your insurance from will be around when you die. So it would be a very good idea to only do purchase your policy from a company that has been in business for a substantial amount of time. And the company should also have received a high rating from the AM Best Company.

With that being said, let’s take a look at term life insurance. One of the most appealing factors about this type of insurance is that you can protect the ones you love in the event of your death at a very reasonable cost, often just pennies on the dollar.

As a rule of thumb, the younger you are the less you will pay for your policy.

Even though term life insurance policies are the cheapest life insurance policies available, a number of options are available that have a effect on their cost. Here are the major types of term policies that are being sold today: yearly renewable term life insurance, decreasing term life insurance, as well as life insurance that’s available for either a 5 year, 10 year, 15 year, 20 year, 25 year, or 30 year term.

Yearly Renewable Term Life Insurance

This policy is for one year and has an option to renew it for a specific number of years. Anticipate that the premiums will increase every year. These policies are best for people who need life insurance coverage for a very short term because the costs can get astronomical as you get older.

Decreasing Term Life Insurance

The reference to decreasing applies to the face amount of your policy. These policies were originally designed to cover the amount owed on a mortgage if the family breadwinner passed on. This is very cheap life insurance because when the mortgage balance goes down the face amount of the policy goes down with it.

Five to Thirty Year Term Life Insurance

Because the cost of renewing a term life insurance policy will be higher than the original premiums it is generally a good idea to purchase a policy with the longest term available, provided that it fits within your budget.

Hope that helps.

Mike

Without knowing the specifics of what you bought when you were younger I can’t really comment on that. However, I’ve got some interesting information to share with you about what the insurance industry is calling “senior insurance policies”.

Perhaps it’s because many of the executives at life insurance companies are middle aged or older, or maybe they’re just getting wiser, but a lot of life insurance companies have recognized that many people that have reached the age of fifty are looking to purchase life insurance. And like any good businesspeople, they are addressing these needs.

As someone over 50 who wants to buy life insurance I’m sure you know that equivalent coverage will cost you considerably more than it would if you were twenty years younger. However you do have a number of money saving options available to you. What say we take a look at some of them?

A lot of life insurance companies have put together different plans whose terms and benefit vary. So, when you shop for affordable life insurance you’ll want to compare the costs and options from a number of different companies before you decide on the best plan for you – the one that gives you the most benefits for your money. Here’s what to look for:

What are the Limits of Your Policy?

Senior life insurance term polices are usually limited to a ten to twenty year term rather than the fifteen to thirty year term that’s usually available to someone in their 20s or 30s. However you can get a whole life insurance policy to fit your needs, especially you want a policy for estate planning purposes.

How Healthy Are You?

Whatever your age insurance companies want to know about your health. They’re mostly concerned about your family health history, your personal health history, whether or not you currently are a smoker and if you ever were a smoker.

They will most likely require you to have a medical exam which will include both a urine test and a blood test.

What Other Things Do the Insurance Companies Consider?

In order to qualify for a senior life insurance policy the insurance company is interested in whether or not you have a criminal record and your driving history.

What Should You Look For In an Insurance Policy?

In addition to comparing prices you should consider the insurance companies ratings. Since an insurance company may offer a variety of plans that have different premiums, payouts, and coverage, make sure that the information you’re getting is accurate and that it is for people over 50.

And do not forget to ask about and then compare discounts because they are available for an over 50 life insurance policy. The most common discounts include those for online purchases and those for a non-smoker. Also if you’re shopping for a term policy compare the cost per year for the term of your policy because you may be able to get a discount based on the policy’s length.

The best thing you can do is to find a reputable life insurance agent. He or she will be happy to help you find a policy that suits your needs and also will be able to let you know if you qualify for any of the aforementioned discounts.

Mike

Good question, and you’re absolutely right. Provided that you don’t have a serious pre-existing medical condition it is possible for you to get a life insurance policy without ever having to see a doctor. However there are some pros and cons.

How Much Coverage Can You Get?

Although quite a few life insurance companies that offer insurance policies that do not require medical exams the amount of coverage will not be as high as what you could get if you opted to apply for a policy that requires a medical exam.

Most of the no-medical-exam policies that are offered are term life insurance policies whose terms could be ten, fifteen, twenty, or thirty years. The good news is that many of them will come with a renewable option. Keep in mind, though, that if you renew your policy years from now your premiums will go up for the same amount of coverage.

Coverage on these policies generally ranges anywhere from $20,000 all the way up to $500,000.

If you want to get a no medical exam policy because you just don’t want to take the time to go to the doctor you must be aware that this type of insurance policy would cost you more than a policy with equivalent coverage that does require a medical exam.

On the other hand, if you don’t want an exam because of some past or present medical condition, then the news is not as good. Even though an exam isn’t necessary you will be required to fill out paperwork that documents your medical history as well as your current health situation. In other words, you won’t be able to avoid disclosing information about your health.

And you really have to be honest on these forms. That’s because if you don’t divulge any of your prior or existing medical issues and you end up dying because of complications from a previously existing condition, then your beneficiaries may not receive the benefits you paid for. The insurance company won’t be obligated to fulfill the terms of your policy.

These policies also require that you provide the company with information about your lifestyle. They’ll ask you about any past accidents or injuries, what prescription drugs you’re taking, whether or not you smoke and if you have any chronic conditions, in addition to the standard questions about your height, weight, and age.

They also want to know if you are part of a group insurance plan or if you have any other life insurance policy.

In addition, a lot of insurance companies have a probation period built into this type of insurance contract. If they discover that you did not disclose information about certain medical conditions during this period, which usually lasts for several years, they will be permitted to cancel your policy.

If you’re still interested in buying an insurance policy that does not require a medical exam then it’s very easy to find and sign up for one of these policies on the Internet.

Mike

That’s a great question. In a nutshell, a variable universal life insurance policy does offer you much more flexibility than a standard whole life insurance policy. And, as you surmised, there are substantial risks involved.

This type of insurance policy offers you a lot of flexibility. That’s because after you’ve made your initial payment you choose when to make additional payments as well as the amount you want to pay. But although your payments are flexible they still are subject to specific maximum and minimum amounts.

And if you don’t make any payments your policy will be in effect for as long as you have enough cash value in it to cover your monthly insurance charges.

Depending on your aversion to risk, you can invest your premiums into one or more of the investment portfolios that the plan offers. These investment portfolios offer you the potential for long term growth combined with tax deferred earnings. You can also make tax free transfers from one portfolio to another.

You also have a choice of death benefits. You can provide a level benefit that equals the original face amount of your policy or you may opt for a variable benefit. The variable benefit will be the original face amount of the policy and your policy account value.

What are the Advantages of a Variable Universal Life Insurance Policy?

There are three major benefits that a variable universal policy offers.
1. Because you have so many different investment portfolios to choose from you have the greatest potential for growth – more than with any other kind of life insurance policy.

2. Within limits you determine when you make your premium payments and the amount you pay.

3. You have the flexibility of increasing or decreasing the face amount of your policy.

What are the Disadvantages of a Variable Universal Life Insurance Policy?

Risk goes hand-in-hand with the flexibility this plan offers.

1. If you make poor investment choices you may have to increase the amount you pay in premiums.

2. If your investment choices do not perform as you anticipate it is possible that your insurance policy will lapse.

3. You run the risk of having problems funding your policy because of the flexibility it permits. Since you can skip payments and may experience negative returns there is the potential of losing the money you have invested along with the insurance coverage that you want.

Because of the inherent risk involved with this type of an insurance program it would be in your best interest to consult with a qualified professional before making your investment. And make sure to read the prospectus in its entirety. Also be sure to have all of your questions answered before investing or sending any money.

Hope that gives you a bit more insight into this insurance product.

Mike