Who? and Why?
Is life insurance for seniors over 70 necessary? Very possibly! We senior citizens have different needs now than when we were younger. However, if you have a family or a business you would like to protect, then life insurance is definitely a necessity. Here are some reasons you may still need coverage:
- Your spouse would have difficulty living without your income
- You have a special needs child or grandchild who will need care when you are gone
- You have a business that will suffer when you are not at the helm
- You want to provide cash to cover estate taxes so your heirs will not have to liquidate any assets
- Charitable giving
- Paying off a mortgage or other debts
- Final expense coverage (funeral, debts, etc.)
In our experience so-called final expense coverage is by far the most requested type of policy for individuals over 70 years old. Most seniors do not want family members to be responsible for paying funeral expenses and/or outstanding bills. This type of coverage is perfect for seniors because payments are fixed for your lifetime.
What kind of policy is best for me? There are two categories of life insurance policies- term and permanent. Term policies last a specific period of time. Permanent policies are designed to last for your lifetime. In addition, permanent policies are either "whole life" or "universal life". Each has own benefits and limitations. A good agent will be able to guide you through the benefits of each as well as what makes the most sense for you.
It's worth mentioning that survivorship life insurance can also make sense in certain family situations. This coverage insures both spouses on the same policy so the premium cost is less, however there is only one death benefit. Survivorship policies for the most part are known as "second-to-die" coverage as the death benefit is paid only on the death of the second spouse. However, recently a "first-to-die" policy has become available which as the name implies, pays the death benefit upon the first spouse's demise. Since the objective of most life insurance is the protection of the surviving spouse, this coverage can be appropriate when larger amounts of insurance are necessary.
Term policies generally last for a specific time period, 10 years, 20 years, or 30 years. However, at age 70 you are limited to policies lasting 10-15 years only. Some companies stop offering term coverage at age 70. There are less choices, and usually term is not the best option at this age, unless you need coverage for a specific time period (like collateral for a loan). If you are considering purchasing coverage that would be needed upon death, then term coverage is not suggested for 2 reasons. You may outlive the coverage, and you cannot convert this policy type to permanent coverage due to age restrictions.
Permanent insurance lasts for your entire life. Permanent coverage is usually the right type of life insurance for seniors over 70. This life insurance is available as either universal life or whole life insurance. The amount of coverage, your current health, and whether or not you will consider undergoing a paramedic exam will help determine what coverage to consider. Here are the different options:
- Universal life insurance- is very flexible and can be structured many different ways to help fulfill your goals. This type of policy requires complete underwriting including a medical exam (with blood and urine samples) and ordering of your medical records. If you want $25,000 or more of coverage, this will be the least expensive option. It will take anywhere from 6-8 weeks or longer to process (depending how quickly your medical records are received).
- Whole life insurance- includes final expense coverage and guaranteed issue coverage. Although both types of life insurance may have some cash value, we do not recommend borrowing from these polices. They are generally issued later in life and may lapse prior to death of the insured if the cash value is reduced. If, however, circumstances change and the coverage is no longer necessary, then the cash value (less any prior loans and interest) will be paid to the owner.
- Final expense coverage- is a simplified underwriting policy. No medical exam, no blood and urine testing and no doctor records are required. You have to answer a number of health questions. A drug database will be checked to confirm that you aren't taking medication for a disease or illness that will cause you to be declined coverage. These policies are available with face amounts of $2,000 up to $40,000. This coverage can be in place in just a few days. It's easy and competitively priced.
- Guaranteed issue coverage- is available if you cannot qualify for any other type of insurance. There are no medical questions at all. The first two years you are covered for accidental death only. If you pass away from illness, your beneficiary will receive the premiums you paid plus interest. After 2 years the face amount is payable for death from any cause. Face amounts range from $2,000 up to $25,000. This coverage can be in place within a few days.
- We have access to many more companies than you can find at a single online source.
- We can help you find the lease expensive policy that meets your needs and where you will be approved for coverage by that specific insurance company.
- We know the slight underwriting differences from one company to another that can account for an application being approved or declined. This will save you time and the inconvenience and frustration that can come from choosing the wrong carrier.
- There is no cost to you for using an agent's services
- Your agent will fill out the application with you and make sure all of the necessary details are taken care of. In short, we are your advocate.
A word about internet sites and life insurance.
Today the vast majority of people look to the internet to make an informed buying decision. In fact, the very reason you're reading this blog post is to inform yourself prior to making a purchase. One thing that may not be obvious, and that is why I want to bring your attention to the fact that price and value may not be the same, just as in the purchase of anything else. For example, would you pay more for a higher rated life insurance company? Perhaps. What about for additional benefits? Probably. Many times cost will be the primary consideration, but it's always the smart consumer that looks for value in everything as well.
Finally, a good independent agent is a valuable resource. Make sure your questions are answered to your complete satisfaction. Your agent is there to provide service before, during and after the purchase of your life insurance.
When is the best time to purchase life insurance? Today!
As a "rule of thumb", you are as healthy today as you are ever going to be! Rates get higher as you get older, and medical issues can cause you to be accepted for insurance at a higher cost health class or even be declined for coverage. In addition, many companies will consider you a year older for premium calculation when you pass your half birthday (these companies use "age nearest" to decide your age).
How much insurance you need will be determined by what you are trying to achieve and ultimately what you can afford. We have clients looking at anywhere from $2,000 up to $500,000 or more. The amount of coverage you want is as individual as the many reasons you need insurance. If you are not sure how much coverage you want, talk to your agent, they will be able to give you the cost for different amounts which can help with your decision making.
The Bottom Line
Buying life insurance for seniors over 70 can be a quick and easy process. Think about the options discussed here. Then find yourself a good independent agent to work with.
Although applications for final expense life insurance are short and relatively simple, they will ask slightly different questions and have different underwriting qualifications. As an example, there are several heart related issues that are acceptable to some carriers, but not to others. As you go through the application process with your agent, any potential underwriting issues can be addressed before submission, and a change to another carrier can be accomplished prior to getting declined for coverage.
Having the help of an agent experienced in the senior life insurance market will make your purchase easy, fast and pleasant. Best of all, you will have the piece of mind that comes with taking care of business!