SmartMoney Blogs

A blog about living in and planning for retirement

3 Things to Consider When Buying Life Insurance


Several years ago, a close friend was widowed; her husband was a wonderful man, and the death was devastating. But unlike many people, she had little debt, lots of supportive family and friends, and enough life insurance so that she could focus on rebuilding her life rather than scrambling for a paycheck.

Many boomers and retirees today wouldn’t be as fortunate. While reporting a story on life insurance, I learned that ownership of individual life insurance has fallen to a 50-year low, according to Limra, an insurance industry group. What’s more, most of us wait until we’re close to 50 to buy coverage.

The good news is that life insurance is now available for those 60 and older or even after a serious illness, but of course at higher rates. Some boomers and retirees will want the coverage of a permanent life insurance policy to offset estate taxes or to leave an inheritance, and those without adequate retirement savings also may want a policy for the surviving spouse.

If you’re in that boat, here are a few things to consider when shopping for insurance:

  • Get the best policy at the best price. To begin shopping for policies, check out a site like and  When you find a well-priced policy, do some homework on the ratings of the company offering it at a site like (you have to register but anyone can get a free rating), Moody’s and Standard & Poor’s. If you’re working with an insurance agent, ask questions about what conditions are covered, guarantees, exclusions and the rating of the insurer. And while it’s true that permanent policies could be good for estate and tax planning for some individuals, the average person saves a bundle by opting for term, says Robert Hunter, director of insurance for the non-profit Consumer Federation of America – so beware of getting “upsold” into a more expensive policy.
  • Communicate with your insurance company and heirs. The National Association of Insurance Commissioners and at least three state insurance departments are investigating about a dozen large life insurance companies for failing to pay out more than $1 billion in death benefits on thousands of small policies. As issue is how the insurance companies keep track of who has died if a claim isn’t made. To help avoid such non-payments, policyholders should inform heirs about the policies and provide insurance companies with current contact information for themselves and all beneficiaries.
  • Focus on your health. While you can’t change your age or genes, you can improve your chances of getting coverage at the best price by improving your health. Quit smoking, drop those extra pounds and get the cholesterol and diabetes under control for starters. If you want the best rates – it may be time to drop the pilot’s license, avoid speeding tickets and improve your credit score by paying bills on time and lowering debt. The National Association of Insurance Commissioners and your state insurance department have additional information, tips and enforcement action against unlicensed insurers.


We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (0)

    • Be the first to leave a comment on this blog.

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.