Think You’re Too Old for Life Insurance? Think Again!
Here's a review of the most common policies available to seniors.
Reasons for needing life insurance vary according to age. Younger adults typically want to provide financial support for their dependents in the event they die. Senior adults often want funds for funeral expenses and outstanding debt so their heirs aren’t burdened with those expenses.
For instance, according to Perfect Goodbyes, a website with resources for people seeking end-of-life advice, the average cost of a funeral in the United States in 2021 is $6,500, although in large cities like Boston, costs average $11,000.
However, not all seniors need life insurance. Individuals who are debt free and have ample savings might not need a life insurance policy. However, life insurance can help with other costs, such as covering estate taxes for those who have a high net worth.
For seniors in their late 50s to 70s who are just now considering getting life insurance, options are limited — but still available — although at much higher premiums to account for the increased risk. Those who are over 80 will likely have difficulty finding even term life coverage.
Keep in mind that many insurers have changed their products and policy applications during the COVID-19 pandemic, so make sure you have the most recent information when shopping for a policy.
Here are a few of the most common types of life insurance policies available to seniors:
Term Life
Term life is the cheapest option because it only provides coverage for a limited number of years. If you outlive your policy, your heirs will receive nothing when you pass away.
Term life insurance for seniors also usually has a low death benefit, such as maximums of $100,000 or $300,000.
This option is best for those who are in good health because term life policies usually require a medical exam. Also, maximum age limits may apply.
Guaranteed Universal Life
Guaranteed universal life insurance provides permanent coverage and is a good option for those whose existing term life insurance policies have expired or are about to expire. While this type of coverage remains in force for the entire life of the policyholder as long as premium payments are made, it doesn't build cash value like whole life insurance and other types of permanent coverage.
This option appeals to many seniors because the premiums are usually affordable and can be fixed at a certain age, however the applicant must pass a medical exam, so it might not be the best choice for seniors in poor health.
Whole Life
Whole life insurance for seniors is similar to a guaranteed issue policy because the policy holder doesn’t need to take a medical exam to qualify. However, the downside is that the premiums are likely to be high and the death benefit low.
For instance, a 60-year-old nonsmoker who gets a $10,000 policy and lives to be 80 will have paid almost $10,000 in premiums and will need to keep paying every month just so their heirs get the death benefit.
One upside is that many policies earn a cash value.
No Exam or Final Expense
No exam life insurance for seniors is similar to whole life — it's guaranteed issue — but with low premiums and low coverage. However, seniors up to 80 years old can get coverage to help with final expenses. These policies usually are marketed to elderly individuals who don't have many assets.
The premium for this type of coverage never increases and remains in force as long as premiums are paid each month. Some final expense policies also build cash value.
Many of these policies have a graded death benefit, meaning there is a two-year waiting period before full benefits are available unless the policyholder dies from an accident. If the policyholder dies from an illness before the waiting period is up, their beneficiaries may not receive the full death benefits.
Funeral
Funeral insurance plans typically are purchased from funeral homes and the payout goes directly to the funeral home to cover specific burial expenses.
Please contact us for more information and help with your situation.
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Think You’re Too Old for Life Insurance? Think Again!
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