As is always the case, a life insurance policy acquired earlier in life will not be as expensive as one that is bought in the late 60s or thereafter. This is because with age, your life expectancy is shorter and your risk of illness and other complications are greater. Yes, options may be limited but with a good search, you cannot miss an affordable life insurance policy that fits your bill. Rule of thumbs, if you want the best for you or your kin in the coming years, never consider not having an insurance cover. You are never too old to get life insurance. In fact, with improved quality of life thanks to technological innovations and breakthroughs in medicine, you can expect to live much longer beyond the 60-year life expectancy.
As the author, economist, and retirement expert Tom Hegna rightly puts it, “the only policy that matters is the one that is in force on the day you die”. Therefore, if you are wondering whether you need a life insurance policy past your working and child-raising age, well, you most likely need one.
Do you need life insurance at age 70?
With grown independent children, substantial retirement savings, investments at hand, and your funeral is taken care of, you probably may not need life insurance. On the other hand, however, seniors past the age of 70 may need a life insurance cover for several reasons including:
- When they still have dependents who need their financial support. This could be grandchildren, a spouse, or special needs children whom you want to be covered after you are gone.
- You want to take care of uncleared personal or mortgage debts and avoid them being passed on to your dependents.
- You want to take care of your funeral expenses without burdening those you have left behind. While any life insurance payout can be used to cover funeral expenses, you can consider a special policy that covers funeral expenses known as burial or funeral insurance (we shall look at this later).
- You want to leave behind an inheritance for your dependents.
- You have financial obligations for your business to cater for continuity in your absence or your estate in the form of estate taxes.
- You want an additional source of savings to take care of emergencies or other needs while you are still alive. Whole life insurance, for instance, converts a part of your accumulated premium into cash value which you can withdraw or borrow against.
- You want to leave a donation to your favorite charity.
NB: If you are considering leaving an inheritance for your special needs dependents, the insurance payout may influence the disability income that they receive but they can keep these benefits. Find out your available options from an attorney.
Life insurance benefits for seniors
The benefits of life insurance after one passes on cannot be underestimated. These lie within the very reason why you need a senior life insurance policy. However, some insurances have benefits beyond the death benefits in the form of living benefits. Such insurances offer you financial assistance while you are still alive. Some living life insurance benefit options include:
- Accelerated death benefit (ADB). This benefit allows the policyholder to access a part of their death benefit in advance, in most cases, to take care of expenses pegged on terminal illness or disability while they are still alive.
- Long term care. Some policies will offer long term care benefits together with the regular insurance death benefits. This is because the cost of long-term care is usually higher than what Medicare covers for some individuals.
- Accidental death and dismemberment. The dismemberment bit of this policy covers specific injuries if the policyholder is involved in an accident. This may include blindness, paralysis, and loss of limbs among others. Different insurers cover different injuries.
- Yearly term purchase rider. Some permanent life insurance policies earn an annual dividend on one-year term insurance policies. This rider allows dividends to be paid out to policyholders. However, the dividend payment is not guaranteed.
- Waiver of premium rider. A waiver of premium rider allows the premiums of a policyholder to be waived in cases like total disability. In this case, cash value and dividends will continue to grow the same way it would have if the policyholders continued paying premiums. However, such riders are limited to a certain age, most commonly 80.
- Collateral for policy loans. It is possible to take a loan against your insurance policy’s cash value or death benefit for personal use.
What to bear in mind when considering life insurance in your golden years
Life insurance for seniors over 70 is usually not the same as regular life insurance policies owing to factors like age and medical history. Some determining factors for the life insurance policy you will select as a senior would include:
As we mentioned at the opening, the older you are, the higher you will pay for life insurance. This is because one has a shorter life expectancy and is more prone to illness.
Most insurers have pre-existing conditions specified, which determine how much premium a senior will pay. This can include conditions like blood pressure, obesity, and heart disease, cancer, diabetes, and asthma among others. It is most unlikely that a preexisting health condition can disqualify one from getting an insurance policy. In case one has a condition that is not specified by the insurer, may be required to undergo a medical underwriting process.
Some lifestyle habits like smoking and drinking will push the cost of a life insurance policy up.
Why do you need a cover?
As mentioned earlier, you probably want to take care of dependents whom you support financially, take care of debts or business obligations, take care of funeral expenses, or simply want to leave an inheritance for your dependents.
How much cover do you want?
How much cover you want will depend on the number of dependents you have, debts, and other considerations. Again, the policy you select will be determined by what you want to be covered.
For how long do you need the cover?
You may need insurance that covers the rest of your life in which case guaranteed universal life insurance would make sense, or for a specific period in which case the term life insurance will be applicable.
How much premium can you afford?
The best insurance for you is one whose premiums you can afford to pay alongside other obligations like medical bills, car loans, mortgage, and the like.
Types of life insurance for seniors over 70
There are five main types of life insurance options for seniors. These are:
Term life insurance provides a cover for a specified period usually between one and thirty years. This type of life insurance pays benefits to the policyholder upon death during the period covered by the policy but not after the term expires. Term policies will typically have an upper age limit and have no additional benefits.
For instance, with an upper age limit of 80 or 90, you would have a maximum of ten or 20 years term if you are 70 years old. Because of this, term policies are popular among people below 70 years of age. Still, many seniors have found it helpful in their situations.
There are two types of term policies:
- Level term insurance policy. In this policy, benefits remain throughout the term covered by the policy.
- Decreasing term insurance policy. In this policy, benefits to the policyholder reduce with the policy term.
The two main determining factors for term life insurance are age and health. If term insurance premiums prove higher because of pre-existing health conditions, consider undertaking a medical underwriting.
Whole life insurance
Unlike the term insurance, whole life insurance covers you for the rest of your life as long as you pay your premiums as expected. It includes a death benefit payable upon the death of the policyholders if the insurance is in force and a cash value accumulated during the time with which seniors can secure a loan while still alive. This together with the fact that premiums remain the same throughout makes it one of the best options for seniors. Whole life insurance is, however, more expensive than term life insurance.
Most life insurance policies have an upper age limit of between 75 and 80 years of age thus age and health are the two key determining factors of qualifying for this policy.
Guaranteed universal life insurance
Guaranteed universal life (GUL) insurance policy is perhaps the most preferred by seniors because it is affordable and covers the rest of one’s life with guaranteed death benefits but without cash value accumulation and the other extras found in whole life insurance. It is important to note that GUL insurance has a specified term which is usually more than your life expectancy. This insurance also gives you the option of lowering your premiums and reducing the death benefit on the same cover if you find it necessary.
A few GUL policies allow you to cancel your policy and get a refund of the premiums paid so far. But this happens only within certain specified years. In case you have health conditions that may disqualify you from getting this life insurance, you have the option of undertaking medical underwriting.
Universal life insurance
Universal life insurance, also known as non-guaranteed universal life insurance, bears some similarities with the guaranteed universal life insurance in that it covers a lifetime. It is one of the most flexible options thanks to its flexible premium payment. You can pay any amount of premium so long as this amount meets the minimum required amount and payment is done regularly. For this reason, the death benefit is not fixed.
Universal life insurance allows you to acquire a loan facility against the cash value. It also allows additional premium payments to be made on savings which could increase the cash value. However, because its accumulated cash value is pegged on the performance of the policy’s investment, it becomes a highly volatile insurance policy. This means that if the policy’s investment performs poorly, you will be expected to pay higher premiums. This high risk makes it an unpopular life insurance option.
Final expense (burial) insurance
As the name suggests, final expense insurance is meant to meet the end of life financial obligations like funeral costs and unpaid medical debts. It is also known as burial or funeral insurance and it lasts a lifetime. This is a special type of whole life insurance with an easier underwriting process as it does not require a medical examination. All you need to do is answer a few questions related to your health to qualify. It usually has a smaller much affordable policy. This insurance also accrues cash value on which loans can be accessed.
Is a medical exam mandatory for seniors to get life insurance?
Typically, insurance policies for seniors involve either a medical exam or filling in a questionnaire related to one’s health. This is because medical history is one of the key factors that determine if a senior qualifies for a life insurance policy. Many insurers will require medical examination reports from seniors who are applying for an insurance policy.
Only a few policies such as final expense and guaranteed life insurance do not require a medical exam. Guaranteed life insurance, for instance, does not require medical exams. Owing to this, their premiums tend to be way more expensive compared to other types of policies and the death benefit will often be capped at a certain amount. You may however come across insurers who offer term or whole life insurance without a medical exam.
Therefore, depending on your health condition, you may opt to go for a policy with or without a medical exam. Your health condition could be the reason why you may be denied a life insurance policy. In this case, you may go for policies that do not require a medical exam. If you are of sound health, you will most likely get a policy that requires a medical exam but with affordable premiums.
While the process of acquiring life insurance for seniors over 70 years may not be an easy one, it is not impossible. There are several policies to choose from depending on your situation. Some will require a medical exam others will need you to fill in a questionnaire. Some are flexible while others are not.
It is advisable to give the correct information whenever you are required to do so. This is because you may miss out on your death benefits if you provide false information about your health. Bottom line, it is important to know what you want in an insurance policy. Also, try to understand the terms in a policy to be sure that you are getting the right one for your needs.