Category: Age 62

Life insurance to pay off a reverse mortgage

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October 11, 2011

9:55 AM

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Age 62, Age 73, guaranteed universal life, In your 60's, In your 70's, Indexed Survivorship Universal Life, Joint survivor guaranteed universal life, Survivorship Life Insurance, Survivorship Universal Life

First let’s assume a homeowner does adequate research including taking a long hard look at the disadvantages and alternatives decides a reverse mortgage appropriate for their situation. Granted, many homeowners will need every penny of this money, but some may desire to tap into home equity for discretionary funds and have broader goals.  For example, those who want an heir to keep the house, life insurance is a means to pay off the reverse mortgage’s loan balance.

For those in average or better than average health, life insurance is readily available in one’s 60’s, 70’s, and even 80’s.   For joint policies only one of a couple needs to be healthy to qualify; the other can be uninsurable.

There are two forms of life insurance: term and permanent.   Term level premium ends in 10, 15 or 20 years, so in generally term is not suitable to cover a reverse mortgage’s lifetime commitment.  For permanent there is whole life and universal life, which comes in many forms.  The best product to cover a reverse mortgages is guaranteed universal life.   It’s fixed rate and coverage for life, usually to age 121.   All the policyholder has to do to is pay the premiums on time.   Couples can get joint coverage, also known as second to die coverage, with a joint survivor guaranteed UL.  How much does a guaranteed UL cost?   There are sample rates by age on the right hand side for individuals.   Please contact me for your own personalized quote.  Here’s an example.

Mr. and Mrs. Jones, both 73 and in good health, needs funds for retirement but want to leave their lakeside home to their daughter, so they decide upon a reverse mortgage.  They qualify for a lump sum payment of $250,000.  They take out a $350,000 joint survivor life insurance policy so their daughter may pay back interest and principal on the loan, and also as a contingency against declining home value.  A $350,000 joint survivor guaranteed UL with Prudential is $650.00 a month, at the preferred non tobacco rate.

If this couple were in average health, this Prudential joint coverage is $887.00 a month at the standard rate.  To show you how joint policies compare to individual, using this example a $350,000 individual policy for a woman is $768.38 a month with Lincoln National and $1,009.23 a month for a 73 year old man with Banner Life.

Keep in mind the heirs can be the owners and beneficiaries of life insurance policy and pay a portion or all of the premiums.

Permanent life insurance more suitable for seniors than term

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June 6, 2011

12:50 PM

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Age 60, Age 61, Age 62, Age 63, Age 65, Age 66, Age 67, Age 68, Age 69, Age 70, Age 71, Age 72, In your 70's, In your 80's, Product

Over the last few days, I compared life insurance websites for seniors in ages 60 through age 72 by Google searching life insurance and adding an age, “life insurance age 68”  for example.   It’s misleading for those in their 60’s and 70’s to see at the top of Google’s list websites with term life insurance given such prominence. Term is not usually the right product for seniors.  The primary purposes of term are to replace lost income or settle an outstanding debt like a mortgage.   Sure if you have less than 10 years to go on a mortgage, term life insurance might make sense.   I would surmise term gets promoted and sold simple because it’s less expensive.  But if one buys term in your 60’s or 70’s, chances are you will outlive your term, and then you’ve paid all that premium for nothing.  Even if you take the best term out there, Genworth, and have the option to convert to a fixed rate universal life, you have to pay higher premiums as your age goes up.

For the majority of people in their 60’s and 70’s permanent life insurance is the most suitable coverage.  If at all healthy, guaranteed universal life insurance is the best.  Coverage starts at a $25,000 benefit amount, and premiums are affordable.  North American has an excellent G-UL right now.   There are also small whole life policies, called simplified issue because there is only a short questionnaire and no blood term.  Coverage starts at a $2,000 a $3,000 benefit amount.   Either choice is better than term because it’s fixed rate coverage for life.