Life Insurance Options For The Over 80S

Life insurance for individuals over 80 is often referred to as burial or funeral insurance, serving the vital purpose of ensuring that financial burdens are not left for loved ones. While options are limited for over-80s, it is still possible to secure life insurance. The best type of policy depends on individual circumstances, but whole life insurance, term life insurance, and guaranteed issue life insurance are all options for over-80s.

Whole life insurance

While whole life insurance policies are more expensive for over-80s, they usually don't require a medical exam. Instead, the policyholder usually just has to answer a few questions about their health. This means the application process is quick and easy, and approval can be granted within a few days.

Term life insurance

10-Year $25,000 Policy: $147.74/month

10-Year $50,000 Policy: $290.24/month

10-Year $75,000 Policy: $423.73/month

If you're 80 and medically qualify for term insurance (few do at this age), ten years is the longest it could possibly last. If you buy a 10-year term at age 80, it will terminate at age 90, leaving you uninsured. It's only advisable to buy a term life insurance policy at this age if you need to cover a temporary liability such as financial debt. Once you turn 81, you will not be able to get a term policy.

Guaranteed issue life insurance

Most guaranteed issue life insurance policies have a maximum coverage of $25,000, and there is usually a two-year waiting period during which your loved ones will not receive the benefit unless your death is accidental. The cost of these policies can range from $100 to $200 per month for a $10,000 to $20,000 death benefit.

When considering guaranteed issue life insurance, it is important to compare quotes from multiple insurance companies, as prices and coverage options can vary. Additionally, it is worth noting that guaranteed issue life insurance may be more expensive than other types of policies, such as term or whole life insurance. However, the ease of the application process and the peace of mind it provides can make it a worthwhile investment for seniors.

Simplified issue life insurance

Pros of Simplified Issue Life Insurance

• The biggest advantage is that the insurer decides faster, with approval taking minutes compared to weeks with traditional policies.
• The application process is much shorter, with only a handful of health questions.
• It is a good option for those who don't want to deal with a medical professional or are afraid that a medical exam will reveal an underlying problem.
• Simplified issue life insurance is generally cheaper than guaranteed issue life insurance.
• It offers more coverage than guaranteed issue life insurance, with higher death benefits.

Cons of Simplified Issue Life Insurance

• Some policies will only pay the full death benefit if the policy has been active for at least two years.
• Because of the limited information provided by applicants, insurers find it harder to determine each applicant's risk, resulting in higher premiums.
• Coverage amounts are lower than traditional life insurance policies.

Who is it for?

• Don't want to take a medical exam.
• Can't wait weeks or months for coverage.
• Are in poor health and wouldn't qualify for a decent rate with traditional underwriting.

Universal life insurance

There are several types of UL policies, including variable, indexed, and guaranteed universal life insurance. Variable universal life insurance involves investing the cash value in grouped investments similar to mutual funds, with each investment having its own management and administrative fees. Indexed universal life insurance ties the growth of the cash value to the performance of a chosen index, such as the S&P 500, NASDAQ 100, or Russell 2000. This type of policy offers greater control over the cash value growth but typically has a lower guaranteed minimum interest rate.

Guaranteed universal life insurance (GUL) is a type of UL policy that won't lapse if the cash value reaches zero. GUL policies are available to seniors up to the age of 85 and provide coverage regardless of health status. However, they are very expensive, and the maximum death benefit is usually limited to $25,000. Additionally, there is typically a two-year waiting period during which loved ones will not receive the benefit unless the insured's death is accidental.

When considering UL, it's important to note the difference between the guaranteed performance and the projected performance of a policy. The guaranteed performance represents the worst-case scenario with minimum returns and maximum fees. UL policies also have a maturity date, typically between 85 and 121 years of age, at which point the policy ends and a payment is made to the policyholder. Choosing a suitable maturity date is crucial, especially if the primary purpose of the policy is to cover inheritance taxes.

Frequently asked questions