One question we’re always asked by clients is, “will the premium ever increase over time?”
That can be a loaded question because there are certain companies out there that will raise premiums in five-year increments. Some will do so in as little as 12-month increments. Other companies will set a specific age that will trigger a significant rate increase, for instance, age 80.
The senior life insurance companies that we use, offering simplified whole life plans or even guaranteed acceptance life insurance plans, do not have the same mechanism for changing rates. Very simply put, once you’re locked in and your application is approved, that rate will remain the same for the entire duration of your policy. There are no changes every five years. There’s never a certain age that triggers a rate increase. For example, let’s say you purchased a policy at age 50 for $30 per month. That premium is going to remain at $30 a month for the entire life you have the policy, and typically with whole life insurance policies for seniors, they’re generally guaranteed until age 105 or older.
So, we definitely recommend that folks understand that not all companies are created equally. A lot of people get hung up on trying to find the absolute cheapest rate for themselves or their parents. The truth of the matter is, the cheapest rate could come with later problems – rate increases down the road or canceled policies at a certain age. We certainly advise our clients not to simply focus on saving a dollar or two per month between companies.
The important thing is finding a policy for yourself or your parents that has lifetime coverage and lifetime premiums and ensuring those certain areas of the policy do not change in time. Basically, you get a rate, then set it and forget it. You do not have to worry about rate changes popping up in the future. Again, this can be found with the right simplified whole life policies which are often referred to as burial insurance or senior life insurance.
There are times when an individual will have to obtain a graded whole life insurance policy or even a guaranteed acceptance life insurance policy. These may have rate changes over time, but this typically applies to folks that have significant health problems and are not able to get the traditional level benefit plan. They will need to accept a higher risk policy due to their health being lesser or not as good as others.