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Living longer brings life insurance challenges

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Melvin Lukenbach writes, in Life Begins at 85:

“They say that life begins at 40, but I’m here to state they’re wrong: It really starts at 85 – ask me – I’ve lived that long. When you’re 65 or 70, they don’t forgive your sins, but when you arrive at 85, that’s when life begins.”

Living longer is becoming a way of life. To prove it, the life insurance policies that are being sold today are using the 2001 CSO. The 1980 table ended at age 99, but now, the 2001 table ends at age 120.

Ken Dychtwald, Ph.D., bestselling author of Age Wave wrote Age Power in 1999 and talked about the baby boomer generation transforming the largest elderly population in human history. He also developed a unique presentation titled “Life Course Navigation,” where he encouraged the audience to chart their journey to retirement freedom.

His question of “How Old is Old?” challenged the listener and viewer to see the changes in perceptions of a 65-year-old, from the picture of Whistler’s Mother at 65 to Sophia Loren at 65. What a difference.

There are many reasons for the changes, such as medical systems and disease eradication, plus the fact that life expectancies are moving the biological potential of the human body out even beyond 120 years. So, with pharmaceuticals, biotechnology and other research, it is within the realm of possibility that someone could live to the 2001 CSO table expectations.

Women want security. Usually, it is their No. 1 priority. So offering 30-year term to a 45-year-old female is not a good planning technique. At the age of 75, she will no longer have protection. And even though the old theory of “buy term, invest the difference” may be appealing at 45, it will not look so good at 75 when she may have 30 more years to live without insurance coverage.

Not outliving her income/money is a very real challenge in the 21st century, and most women who are living longer want to leave something to their children and grandchildren. The real challenge is to do thorough financial planning at all levels. Risk management (life insurance, long term care insurance and health coverage to coordinate with Medicare) is at the base of the financial pyramid, then moving up into products and methods of growing wealth and distribution options in later life.

Living longer creates the need to re-vision retirement, and women – who actuarially live longer than men – have the biggest challenge. Female consumers need a wakeup call financially to be prepared for longevity. If our retirement years are going to be fulfilling and a smooth sail, preparation is the key. Being flexible, having choices, and taking personal responsibility for your own financial freedom is the client’s part. Our part is to help her to plan and make decisions that will assure her a secure future.