Seniors over age 75 need life insurance
for many of the same reasons as other policy holders. End-of-life costs and individual circumstances mean that life insurance for seniors over 75 is still an important purchase.
Use this guide to learn more about benefits and options for purchasing life insurance after age 75 and why an independent senior life insurance agent is key to making the process straightforward and successful.
What is the Benefit of Life Insurance for Seniors Over 75?
Although most seniors over 75 don’t expect to generate new sources of income, there are still compelling reasons for purchasing life insurance at this stage:
- To provide for final expenses so as not to burden a surviving spouse or other loved ones with funeral costs.
- To leave money for debt repayment.
- To provide for a special-needs adult child.
- To leave a tax-free inheritance to family members, friends or charities. Whereas direct inheritances are subject to estate taxes, insurance death benefits are usually not.
- To replace an income stream for dependents.
- And others.
If you do need protection to put your mind at ease about such concerns, you’ll likely have some or all of the following questions about the best and most affordable life insurance for seniors over 75.
How Much Life Insurance Do I Need?
How much insurance you need is a personal decision. Are you looking for a policy to cover only funeral expenses, or do you need to keep a spouse or family member financially afloat? Think about what problem this insurance is intended to solve.
Further, look at annual or monthly expenses, and outstanding debts, if you have any. These can give a rough estimate of your current spending and how much your dependents may need in future. Independent senior life insurance agents are also specialized and experienced in assisting with these calculations.
Whether you are looking for a small or large amount of insurance, you will have options.
What is the Best Life Insurance Policy for Seniors over 75?
The following life insurance policy types are available to seniors. Term life insurance may be considered as “temporary,” since it has defined start and end dates where the premium stays level. All of the other policy types are considered “permanent.” These policies do not change premiums or face values for your lifetime.
Term Life Insurance
Term life insurance for seniors has a defined time period where there is a guaranteed death benefit and premiums that stay level for the “term.” A paramedical exam is required as part of the application process. For younger seniors, this is the least expensive life insurance product available. However, the price difference between term and permanent policies is often negligible for seniors over 75.
Insurance carriers only offer 15- year terms for seniors 75 and older and 10-year terms for seniors aged 80+. (If you are considered a smoker, the maximum ages may be lower). If you live longer than 10 years, the policy terminates and you’ll no longer have life insurance. You may not have the opportunity to buy another policy and if you can get coverage, the price will be very expensive.
Term life may be a good choice if you only need coverage for a few years. Term life insurance is definitely not the right choice for seniors over 75 who want to prioritize final expenses or a guaranteed benefit no matter their age at passing.
Final Expense Life Insurance & Graded Final Expense Life Insurance
If your priority is to ensure that loved ones aren’t burdened with final expenses, you can purchase one of two types of final expense policies. Final expense life insurance is the only option if you require less than $25,000 of coverage.
These are whole life policies (meaning that they last for your lifetime) with simple, quick underwriting that requires no medical exam. However, the applicant must answer a number of medical questions, and the insurance company will check a prescription database and the Medical Information Bureau to confirm the answers.
- Final expense policies offer coverage from $2,000–$50,000. (If you want more coverage, you need to purchase policies from multiple carriers). These policies can be fully in place within a day, and the face amounts and premiums remain the same for the life of the policy.
- Final expense graded policies offer coverage from $2,000–$35,000, depending on the carrier (some only offer up to $25,000), and may cost more than “level” policies because the insured is determined to be a higher risk by the underwriter.
“Graded” means that the policy phases in over 2–3 years. If the insured passes away due to any medical condition within the graded period, the beneficiary receives all premiums paid, plus interest (usually about 10%, although it can be lower). If death is accidental, the beneficiary receives the full payout of the policy (without interest). Some carriers may payout a percentage of the death benefit in year two and three for death due to a medical condition.
After the graded period is over, and upon the passing of the insured, the beneficiary receives the full face amount of the policy (without interest), no matter the cause of death.
It's important to know that every carrier asks slightly different questions. This can mean the difference between approval and decline. An independent agent should be aware of the questions and help determine which carriers are more likely to approve the applicant.
Other types of permanent policies (with the exception of Guaranteed Issue coverage discussed below) require medical exams and full underwriting, so carriers have more information to assess the risk of insuring an older senior. Therefore, premiums for such policies usually cost less (per thousand dollars of coverage) than final expense insurance when the applicant is over age 75.
These complexities and considerations again illustrate why independent agents specializing in senior life insurance are indispensable to selecting the right policy at the right price for your needs.
Universal Life Insurance
Senior universal life insurance policies are also permanent, and provide flexibility with a number of attractive options. For instance, some policies have face amounts and premiums that remain unchanged for your lifetime. They can be designed so that the benefit does not accumulate cash thereby keeping the premium lower. The minimum face amount for universal life insurance policies is between $25,000 and $100,000 depending on the carrier and the state where the applicant lives.
Policies that offer such flexibility often come with full underwriting. Universal policies usually require a medical exam, which can include blood and urine tests, a cognitive exam, and EKG and the underwriter may also request medical records from your doctor(s).
As with final expense life insurance, there are several types of universal life insurance policies:
- Guaranteed premium universal life policies (GULs or GPULs) can structure the policy for little to no cash accumulation. For this reason, they are usually the least expensive permanent policies available.
GPULs can be guaranteed to age 121 (considered to be a lifetime policy) or younger. They most often start at a face amount of $25,000; however, in some states the minimum may be $50,000 or even $100,000.
- Survivorship life insurance (or “second to die” insurance) plans cover two people in a single policy. The death benefit is paid after the second insured passes. Survivorship insurance is less expensive than two separate policies would be. Also, if one of the insured might be declined for an individual policy, they can often get this type of coverage together with their spouse or legal partner.
This is a common vehicle used to leave cash to children for paying inheritance taxes after the second parent passes.
- Indexed universal life policies (IULs) have an investment component in the coverage that allows you to keep cash value in a fixed account (like a money market savings account) or to invest in an equity index account (such as the S&P 500 or the Nasdaq 100).
The premiums, death benefit and cash accumulation associated with the plan can be altered as needed during the life of the policy. Although you cannot lose cash in an IUL, gains are limited. A “floor” is in place to protect your cash value, and a cap limits the gains allowed. This type of policy is for a more sophisticated investor.
- Variable universal life policies (VULs) are for sophisticated, experienced investors. VULs are considered to be securities, and may therefore only be sold by a registered representative with a securities license. You can lose money in these policies, unlike an IUL.
Guaranteed Issue Life Insurance
Guaranteed issue (or guaranteed acceptance) life insurance is a type of final expense coverage. It is the easiest product for seniors to purchase. However, it should only be considered as a last resort, since it is the most expensive senior life insurance policy available. Guaranteed insurance is a product designed for seniors who cannot qualify for any other type of life insurance coverage.
Guaranteed issue policies usually offer coverage from $2,000 up to $25,000. There are no medical questions to answer and all applicants are accepted. However, this coverage comes with a “waiting period” similar to a graded final expense policy.
If the insured passes away during the first two years (some carriers require three years) of the policy, no death benefit is issued, but the paid premiums are returned, with interest, to the beneficiaries. If the insured lives past the two- or three-year period and the policy comes into full effect, beneficiaries receive the entire face amount (without interest) upon the insured’s death.
The good news is that everyone has at least one option for protecting their loved ones with a life insurance policy.
Are There No-Exam Policies for Seniors Over 75?
Some seniors don't want to wait the six to eight weeks it can take for life insurance policies that come into effect only after a medical exam. For others, such exams are invasive or uncomfortable. In particular, many seniors over the age of 75 may prefer or need to acquire coverage without an exam. Several no-exam senior life insurance options exist.
Many carriers evaluate overall health and risk factors from a medical questionnaire filled out by the applicant and agent. The questions are looking for serious health issues. They will verify the application using the Medical Information Bureau before making an eligibility determination.
Applicants who are or would be declined for fully underwritten coverage may qualify for final expense coverage, because of the simplified underwriting. This is another reason to talk to an independent agent, so you avoid a decline on your MIB file. (Some final expense carriers will not insure you for up to two years after a decline.)
No-exam plans are easier to secure and activated faster than fully underwritten plans.
The best possible life insurance policy is meant to be a safety net that will be there when your family needs it most; if you think acquiring a policy is urgent, a no-exam policy could be the right choice.
It is important to remember that no-exam policies still require applicants to provide some health information. Details about your general health, certain medical conditions and medications you take will play a role in determining your eligibility. The underwriter will either accept or decline your application. With no-exam policies, the choices are level benefit and graded benefit.
Seniors over 75 who are interested in no-exam policies will likely have a lot of questions about whether this is the right product for them. An independent senior life insurance agent can provide information quickly and clearly, as well as make recommendations about which companies are most likely to accept applications based on the applicants health history.
Why Should I Get a Life Insurance Agent?
As you can see, there are numerous alternatives in life insurance policies for seniors over 75. It's important that all seniors educate themselves about their life insurance options, and that they understand key terms regarding policies and application processes.
However, you don’t have to invest your own time researching answers to situation-specific questions, pricing and different insurance carriers. An experienced life insurance agent will quickly advise you, differentiate between options and have access to policy information that is not available online.
Hiring an independent life insurance agent is the most efficient use of your time and money, especially for seniors over 75, who often have unique needs. Independent agents are not employed by any one insurance company; rather, they have access to numerous high-quality carriers.
An experienced independent agent who specializes in senior life insurance is knowledgeable about the differences in applications, policy details, rating systems and underwriting requirements between insurance companies.
For seniors over 75, the small differences between carriers in application wording or underwriting guidelines can mean the difference between being approved or declined. A good independent agent will find policies for which you are likely to be approved because each carrier asks for slightly different information.
An experienced independent life insurance agent who specializes in senior life insurance is your greatest resource for explaining the options and getting you appropriate coverage as quickly as possible.
The Bottom Line
Life insurance for seniors over 75 is useful for protecting or providing for a family, leaving an inheritance and covering final expenses. An independent agent who specializes in senior life insurance is integral to understanding options and finding the best coverage at the best rates for these purposes.
These agents will save you time and money by assessing your needs and relevant medical conditions, steering you to carriers where you can qualify for insurance and helping you find the least expensive policy that meets your needs. Consulting an independent agent is well worth your time.
Lenny Robbins is the owner of LifeNet Insurance Solutions, which specializes in life insurance policies for seniors and Baby Boomers. With over 40 years’ experience in financial services, including the last 26 exclusively in life insurance advising, Lenny is an expert agent with diverse knowledge of the products available to clients moving into their best years. Lenny is committed to establishing client trust and ensuring clients are covered by the best policies for themselves and their dependents. He takes pride in knowing that clients return to LifeNet for advice and assistance as years pass and families grow.