If you’re a “senior” looking for life insurance, then chances are you have a lot of preconceived notions about what your policy may look like and what you might have to pay for a life insurance policy. The idea that seniors can’t qualify for affordable and good coverage due to age restrictions is a notion of the past.
Depending on your age and, more importantly, the condition of your health, you may find that you have more options than you initially thought for life insurance coverage. The key to finding affordable life insurance as a senior is to cast a wide net. We can help. Let’s dive into some basics, and answer your pressing questions about finding life insurance as a senior.
What Do You Need Covered?
When looking for a life insurance policy, your first step – even before calling an agent (although that should be the next step) – should be to sit down with your loved ones and figure out what you will need covered. Life insurance is such an interesting field because it grows and reflects the needs of the beneficiary. Simply put: the things you will need your policy to cover as a senior will differ greatly from what you may have needed in your twenties and thirties. Let’s take a look at some of the things you need to cover with your life insurance policy:
- Medical expenses. As a senior, taking care of your health is incredibly important. It is an unfortunate fact that, as we age, our health has a greater chance of deteriorating. And medical expenses can add up quickly. You should also consider nursing home costs in your calculations.
- Pension replacement. One of the biggest life milestones to consider as a senior is retirement. If your significant other relies on your pension income – or may rely on your pension income in the future – you will want to consider building a buffer for your spouse to maintain their standard of living if you pass away.
- Your estate. Seniors considering life insurance have a lot to consider, particularly whether or not their families will need assistance to cover estate or inheritance taxes. This depends on the value of your assets and the types of assets passed down. Should you have a significantly-valued asset – such as a piece of property – that your family should gain after your passing, a life insurance policy may be a good way to ensure they can cover the estate taxes.
- Funeral expenses. Let’s face it: life insurance is morbid. The whole idea is that your family is protected in the event of your death. What a lot of senior clients don’t consider is whether or not your funeral expenses will be covered after your passing. The average cost of a funeral in the United States can range from $7000 to $12000! Saving enough money to cover these costs is important; however, we know that most people don’t want to think about their own mortality. If you haven’t saved enough for these costs, your family will be the ones paying for them. A life insurance policy can save your family the financial stress of paying for a funeral.
Age Shouldn’t Be A Deterrent
At the age of 65, you’re considered a “senior.” The problem with this label is that 65 is quite young! With advances in technology, and taking good care of yourself, 65 can really be looked at as closer to 55. The good news is that life insurance companies often recognize this – especially if you have a good agent who can present your case to underwriters.
The good news is that limitations on the types of life insurance available to you don’t increase after 65! In fact, the 70-and-up crowd may only find restrictions in the limitations of term life insurance. This means that the policies you’re shopping for at this age should depend on what your financial needs are and your current budget.
Inexpensive Insurance for Seniors
Term life insurance is still the best insurance choice, even for seniors. Term life insurance is your least expensive option, and you will often be able to find plenty of coverage (up to hundreds of thousands of dollars). Additionally, you can find coverage for a fixed period of time, anywhere between 10 and 15 years.
Inexpensive premiums allow you to stay in line with your current budget, and your coverage typically should only be large enough to cover for a mortgage or retirement, or to pay for final expenses. It is important to look at the amount of time you need covered and to ensure your policy covers this time period, as your rates will go up if you are re-shopping for coverage at 80 or 90. While coverage for 20 years or more is more difficult to find, it is not impossible and an experienced agent can help you find the options for you.
Permanent Life Insurance For Seniors
You may find that, in your later years, you’re looking for coverage to last your lifetime. In this case, you may want to talk to your agent about purchasing a form of permanent insurance. Most people hear “permanent life insurance” and think “whole life insurance,” however, for seniors the best type of permanent life insurance is actually guaranteed universal life insurance.
Guaranteed universal life insurance is basically a term life insurance policy that is designed to last until your later years, often well into your late-90s or even to age 100! This type of life insurance offers lifelong coverage at less cost than whole life insurance.
We don’t typically recommend that our senior clients seek out whole life insurance policies, because these policies are designed to build cash over time. This means they can be borrowed against or withdrawn, but a portion of your premiums will go toward your cash value. This means that whole life insurance is more expensive and less valuable, because there is less time during which these policies will grow interest.
I’m Over 80: What Are My Insurance Options?
Let us start by saying that there is a lid for every pot, and an insurance policy for every situation. While you may find that you have a hard time qualifying for term life insurance policies over 10 years, you can most likely still qualify for a permanent policy.
If you are over 80 and need a life insurance policy, give us a call! We can help walk you through your options, based on your individualized needs.
Some insurance policies include “living benefits,” or allow you to add these benefits through a rider. A living benefit add-on can provide financial assistance while you’re still living, including:
- Accidental death and dismemberment, which provides a payout should you sustain injuries in an accident. Companies will have a parameter for the injuries they cover, but some insurers cover: blindness, paralysis, or loss of a limb. Depending on what the injury is, you may be eligible to receive a percentage of your benefit..
- Waiver of premium riders allow you the option to stop paying your premiums, while maintaining your insurance coverage. Typically, this option is only available if you become disabled, and it expires when you reach a certain age, usually 80.
- Accelerated death benefit riders give recipients the option to receive part of the death benefit early – if you’re diagnosed with a qualifying illness. This allows you to allocate a portion of your death benefit to cover medical expenses. The caveat: be sure to check which illnesses the insurer will cover.
With an accelerated death benefit rider, the amount of benefit you will be able to receive is capped at a percentage of your total benefit, or a fixed dollar amount. Once you pass away, the amount you received will be deducted from the coverage your family will receive once you pass away. For example, if your death benefit is $250,000, your insurer could cap the accelerated amount at “75% of the policy’s face value, or the lesser of $125,000.” This means you can request up to that $125K amount while still living.
The important thing to remember is that every insurer looks at age differently when considering providing coverage. For seniors looking for life insurance, this means that shopping around and looking at multiple companies is the best way to find a policy to suit your needs.
Life insurance is more than age. Your health and financial needs, both now and in the future, should also be taken into consideration when shopping for life insurance as a senior. This is where we can help! Noel Insurance has built relationships with a huge network of insurers, and is easily able to help you narrow down your preliminary choices, and to present you in the best light to underwriters. Give us a call today, and let’s talk about your insurance options.