Even though most people over 80 don’t expect to generate new sources of income at this point in their lives, there are some compelling reasons for life insurance for seniors over 80.
- To leave a tax-free inheritance to family members, friends, or charities. Whereas direct inheritances are subject to estate taxes, life insurance death benefits are usually not.
- To provide for final expenses. A senior over 80 may not want to burden a surviving spouse or other family members with funeral costs.
- To replace an income stream.
- To leave money to repay debts.
- To provide for a special needs adult child.
- And many more.
If you have any of those needs or other ones, there are three questions to consider as you look for life insurance for seniors over 80 that meets your needs for the least cost.
How much face value (death benefit) do I need?
Obviously, if your goal is to leave an inheritance, the face value you need will be entirely dependent on how much you want to leave behind and how much insurance you can qualify for financially. (There are limits to the amount of insurance you can purchase based on your current finances.)
But even if you’re only thinking about final expenses, when you are over 80 the cost can be a bit of a surprise. Final expense policies usually range from $5,000 to $25,000. However, you can get a universal policy with much higher face amounts.
What type of policy to buy?
In addition to term and permanent life insurance policies, you can buy final expense policies, some of which do not require a medical exam. This is basically whole-life insurance with a low face value of up to only $25,000. You have to be able to answer certain medical questions to qualify for these policies.
If you want a higher face value than $25,000, the choice between term and permanent life insurance is much different than it would be for a younger person. When it comes to life insurance for seniors over 80, however, the price difference between term and permanent policies is often negligible.
With a term policy, you don’t get the benefit of coverage for the rest of your life. Term life insurance policies for seniors over 80 never have more than 10-year terms. So what if you’re fortunate enough to live past the 10 years? You’ll have no life insurance and no chance of buying more.
Therefore, it’s generally best for seniors over 80 to buy a permanent life insurance policy if they need more face value than a final expense policy. Keep in mind, although both term and permanent policies require medical exams and full underwriting the cost is usually less (per thousand of insurance) than a final expense policy.
Who Can Help?
Because of the unique nature of life insurance for seniors over 80, you can save significant money by consulting an independent life insurance agent with extensive experience in life insurance for seniors.
For a person in their 30s, buying life insurance is relatively uncomplicated, and the pricing (for term policies) is pretty straightforward. But as you age and develop health issues, you can find the best deal by working with an independent agent who knows which carriers have underwriting guidelines that are most favorable to your issues, as well as to seniors over 80 in general.
An independent agent also may be able to help you qualify for a table shaving program that can improve your health rating, reducing your premium even further.
The Bottom Line
Life insurance for seniors over 80 is useful for protecting a family, leaving an inheritance and/or covering final expenses, but making the right choice isn’t as simple as looking online. Talking to an independent life insurance agent that specializes in life insurance for seniors will be well worth your time.
Photo Credit: Steve Bowbrick