As we get older, it’s important to consider how our life insurance needs may change. While some assume Life Insurance After 70 is no longer necessary after retirement, having coverage can still provide financial protection for loved ones.
Contents
Why Consider Life Insurance after 70?
Many people assume they no longer need life insurance once they retire. However, there are several good reasons why coverage may still make sense even after passing age 70:
Provide for Burial/Final Expenses
While healthcare costs are largely covered by Medicare after 65, final expenses like funeral costs, outstanding medical bills, and other debts still need to be paid for by someone. Having a life insurance payout can help cover these costs without placing the burden on loved ones.
Maintain Current Lifestyle for a Spouse
Even in retirement, most people still rely on income from pensions, retirement accounts, and other savings to cover living expenses. The death of a spouse could create a financial shortfall, especially if one income needs to now cover two households. Life insurance proceeds can help maintain a surviving spouse’s lifestyle.
Provide Inheritance for Heirs
Many people want to leave an inheritance for their children and grandchildren. While over-70 coverage won’t typically be large enough for a sizable inheritance, it can still pass something down to heirs versus leaving them nothing.
Pay off Mortgage or Other Debts
Some seniors still have mortgage balances or other long-term debts like car loans. Life insurance can be used to pay off these obligations so they don’t burden loved ones after death.
Receive Long-Term Care Benefits
Certain life insurance policies offer an accelerated death benefit that allows policyholders to access a portion of the death benefit if they need long-term care. This can help cover expensive nursing home or assisted living costs.
As you can see, there are legitimate financial protection reasons why coverage may continue serving an important purpose even at an advanced age. The needs will be more limited than during working years, but having some death benefit can provide valuable assistance to loved ones.
Types of Life Insurance After 70
When considering coverage over 70, your options are more limited than when you are younger due to increased health and mortality risks. Here are the main types available:
Guaranteed/Simplified Issue Term Life
This no-exam term coverage is easy to qualify for up to age 80. Premiums are higher than standard terms since medical underwriting isn’t required. Face amounts are typically $25,000 or less, adequate to cover final expenses.
Final Expense Whole Life
A type of permanent coverage designed specifically for seniors, final expense plans provide smaller guaranteed death benefits of $10,000-$25,000 to cover end-of-life costs. Premiums are fixed for life.
Senior Universal Life
A hybrid permanent policy that offers flexibility on premium payments and death benefits. Coverage may be available up to age 85. Riders can provide long-term care benefits.
Conversion of Existing Term Policy
If you have term life from earlier years, you may be able to convert it to permanent coverage without additional medical exams. This ensures guaranteed coverage at older issue ages.
The right type depends on factors like age, health status, premium affordability, and intended needs. Work with a broker knowledgeable about senior options to find a suitable plan.
Qualifying and Pricing for Over-70 Coverage
While obtaining coverage past age 70 is possible, underwriting standards are more strict at this life stage due to higher mortality risks. Here are some details on qualifying and pricing:
Health Screening and Underwriting
The application usually involves a telephone interview about medical history and daily activities. A paramedic exam may be required. Pre-existing conditions and chronic illnesses could lead to declines or higher premiums.
Issue Ages and Expiry
Most guaranteed/simplified issue terms end at the age of 80-85. Final expense/senior whole life may insure up to age 90-100 but at steadily rising premiums. Underwritten coverage tops out in the low 80s.
Premium Costs
Expect to pay $50-150 per month usually for $25,000 of coverage, depending on factors like age, health, and plan type. Costs are often 10-15x more than standard rates in early years. Premiums on universal life may rise after age 85.
Paying Premiums to Advanced Ages
Ensure you can afford coverage for the very long term, as policies remain in force until age 100+ if premiums are paid. Lapse rates are higher among older seniors struggling with costs.
Due diligence upfront reduces surprises later. Have open discussions with agents about qualifying odds and true premium commitment required to maintain coverage through life expectancy.
Maintaining or Replacing Existing Policies
As you age past 70, it’s prudent to review any existing policies to determine if changes make sense:
Convert Term to Permanent
If within the conversion period, it may cost less to switch than buying a new policy and receive guaranteed coverage without medical exams.
Replace Old Whole Life
Some very old policies lapse due to rising costs. Replacing with a simplified issue or final expense plan may lower premiums while maintaining protection.
Drop Unneeded Riders/Coverage
Consider removing living benefits and waiver of premium riders that are unlikely to be utilized at an advanced age. Streamlines the policy and saves on costs.
Downgrade to Lower Face Amount
Maintaining an excessive death benefit is wasteful once health deteriorates significantly. A smaller benefit balances protection with affordability as you age.
Use Accelerated Benefits Before Lapse
Rather than letting a policy lapse, take advantage of accelerated benefits for chronic illness or long-term care needs if eligible.
Reviewing existing contracts regularly ensures coverage remains practical and cost-effective given changes in health and life stages. Policies shouldn’t lapse due to neglect or lack of appropriate adjustments over time.
Life Expectancy and Coverage Duration
Proper planning also requires understanding average life expectancy as well as risks tied to outliving a policy:
Life Expectancy Tables
According to the IRS, the average American male reaching 70 can expect to live another 15 years to age 85, and a female 17 more years to age 87. Of course, genetics and lifestyle factors impact actual longevity.
Living Beyond Life Expectancy
About 25% of 70-year-olds are estimated to live past 90, so there’s a reasonable chance of outliving even a policy guaranteeing coverage into the late 80s. Premiums must continue being paid.
Lapse Risks
If healthy enough, seniors usually maintain coverage till death. However, poor health or limited finances increase the probability of a policy lapsing before claims can be filed due to missed premiums.
Care Planning is Important
Even with coverage, having resources and plans in place to cover extended lifespan risks like long-term care is prudent in case benefits are needed well past the end of a policy period. Planning makes sense.
Proper diligence involves candidly assessing health and financial situations against average and maximum life expectancy figures. This allows for coverage that balances needs against real-world longevity risks. Working with professionals provides guidance tailored to individual facts.
Common Questions About Over-70 Policies
Here are answers to some frequently asked questions:
1. Can coverage be underwritten if unhealthy?
For underwritten policies, pre-existing conditions could lead to higher premiums or declinations. Simplified issue plans don’t consider health, making qualification easier but at a cost. Certain major illnesses may still result in declines.
2. Can spouses be covered on the same policy?
Yes, some companies offer joint or survivorship policies allowing a married couple to share one permanent life plan into very old age. Premiums are higher than individual coverage.
Not necessarily – guaranteed/simplified issue term premiums are fixed for the coverage period, usually 5-10 years. Premiums on permanent policies may level off after older issue ages or increase only modestly per certain schedules. Check carrier illustrations.
4. Can the death benefit be accessed while alive?
With many universal life or whole-life plans purchased by seniors, a portion of the death benefit value can be withdrawn through an accelerated death benefit rider if the insured becomes chronically ill and needs long-term care. This provides living benefits too.
5. How long does a claim typically take?
Most life insurance companies process claims quickly, usually within 3-6 weeks after receiving a complete claim package. Beneficiaries shouldn’t expect long delays once due documentation is promptly submitted. Expedited claim service is appropriate, given the policyholder’s age.
As you can see, with proper research and guidance from experts, seniors have options for tailoring affordable life insurance well into their 70s and beyond. The right plan balances needs with health and financial considerations to continue providing important protection even later in life.
Be the first to comment