10 Senior Life Insurance Terms That You Need to Know
As many such industries are, senior life insurance is riddled with its own zoo of technical terms. Sometimes insurance companies will try to use these terms to confuse potential clients into accepting life insurance policies that aren’t in their own best interests. Here are some terms that you need to know if you’re considering a senior life insurance policy of any sort.
This is the amount that an insurer will pay out to the beneficiaries of your senior life insurance plan. Usually, an amount to be paid out at regular intervals for life. So, for example, a life insurance plan might pay an annuity of $40,000 every year to your spouse.
Cash Surrender Value
An amount payable in case a policy owner decides to terminate their plan before it would usually pay out in virtue of the owner’s death or some other conditions of maturity. This will usually be an agreed upon amount minus a surrender charge and any other fees or debts owed.
If you want to purchase a senior life insurance plan for another person, then you must have some insurable interest in them. An insurable interest exists between any two people related by blood, those who have established an interest through a history of affection (e.g. married couples), or anyone else who has a lawful or economic desire that the subject of the life insurance plan should continue to live. For example, you would be able to buy senior life insurance for your parents because you are related by blood as well as a history of affection.
How long your insurance provider expects you to live. Insurance providers will usually have a table with which they determine the likelihood that an insurance holder will die by a certain age. What’s on this table is what determines your basic premium, which can go up or down depending on other factors that may affect the length of the insurance holder’s life.
No-Exam Senior Life Insurance
Especially important for seniors, some insurance providers offer a no-exam life insurance option. If you choose this option, then you’ll be offered life insurance plans that don’t require any sort of invasive and inconvenient medical approval beforehand.
Participating and Non-Participating Policy
In a participating policy, the insurance company agrees to distribute its yearly surplus to policyholders in order to cut their premiums for that year. In the case of a non-participating policy, this surplus will not be distributed.
An insurance company will assign insurance holders a risk classification in accordance with various factors (e.g. age, pre-existing conditions, life expectancy, occupation, or country of residence). Depending on whether the policyholder is assigned a low or high-risk classification their premiums may go up or down.
There are many different ways that you can arrange for an insurance plan to be paid out. The options typically involve some combination of time (a fixed period, a period dependent upon the amount of money to be paid out, or a whole-life payout) and the rate at which the money will be distributed.
This is likely the person an insurance holder will be dealing with the most. The underwriter is the one who evaluates each potential policyholder and determines whether or not they are eligible for senior life insurance and, if so, what an appropriate premium will be.
Term Life Insurance
Term life insurance is especially important for seniors over 60. Such insurance policies aren’t applicable over an entire life, like whole life insurance plans are. Rather, a term life insurance plan applies for a certain time period, after which, if the policyholder has not passed, the plan fades away. So, for example, someone aged 65 could feel confident with a 30-year term life insurance plan if they did not expect to live past 90.