Page 7 - The Lifeline Program White Paper

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purchased term insurance when they were
younger, the period of the term may be close
to ending, and seniors often debate whether or
not to keep the insurance coverage. The
original plan may have been to only keep the
insurance until children were grown, a
milestone which may have been reached.
Other seniors may be holding permanent
insurance in forms called whole life or universal
life. This type of policy was likely sold as an
investment because it builds cash value over
time. Regardless of the type of insurance that a
senior might have, the aforementioned
crossroads is usually impacted by increasing
costs. Term insurance, which was often
purchased when seniors were much younger
and cheaper to insure, may now cost ten times
as much per year. Universal life insurance costs
also tend to escalate.
Independently of this, if insurance was
purchased for the purpose of paying estate
taxes, it may no longer be needed for that
purpose.
Many factors at this crossroads will point a
senior toward the options of not renewing
policies, cashing them in for the value that
whole life insurance has built up over time, or
simply letting the insurance lapse.
We recommend that seniors should do
everything in their power to keep their
insurance in force for as long as possible. Many
term insurance policies are sold with options
that enable the policy to be converted to a
whole life policy. Many boomers have this type
of insurance and don’t even know it.
The beauty of convertible term is that the
pricing is based on the underwriting used when
the policy was initially purchased. Converting
an old term policy to whole life may be
significantly cheaper than buying a new policy
because the underwriting is based on the
medical records from years earlier.
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