Haris Ashley
Life insurance is a tricky topic at any age, but especially so for those over 70. At this stage in life, your financial responsibilities and priorities are likely to have shifted, and you may question the need for continued coverage. While it's true that many people in their 70s may no longer require life insurance, it can still make sense to get coverage depending on your specific circumstances. The decision ultimately hinges on factors such as your financial situation, health, and the needs of your loved ones.
| Characteristics | Values |
|---|---|
| Age | The older you are, the more expensive the premiums will be. |
| --- | --- |
| Dependants | If you have dependants, you should consider keeping your insurance or purchasing coverage. |
| --- | --- |
| Debt | If you're in debt, keeping life insurance is a good idea. |
| --- | --- |
| Inheritance | Life insurance can be used to leave an inheritance. |
| --- | --- |
| Estate taxes | Life insurance can be used to pay estate taxes. |
| --- | --- |
| Final expenses | Life insurance can be used to cover final expenses. |
| --- | --- |
| Health | The healthier you are, the more likely you are to get approved for life insurance. |
What You'll Learn
Life insurance for seniors: what are the options?
Life insurance for seniors is a way to support your loved ones after you're gone and can help ease the financial burden on your family. It can be used to cover final expenses, pay off debts, fund charitable contributions, or leave an inheritance. While it's not always necessary, it can provide peace of mind and financial security for your family. Here are some options to consider:
Term Life Insurance
Term life insurance is a temporary policy that offers coverage for a set period, typically 10 to 30 years. It is generally more affordable than other types of policies, making it a good option for seniors on a budget. However, your coverage will lapse if you outlive the policy term, and term lengths may be restricted for older adults. Term life insurance usually requires a health questionnaire and medical exam, but there are also simplified or guaranteed issue options available.
Whole Life Insurance
Whole life insurance is a type of permanent life insurance that lasts for the entirety of the policyholder's life, as long as premiums are paid. It often includes a cash value component that can be used during the policyholder's lifetime. Whole life insurance is more expensive than term life insurance and usually requires a health questionnaire and medical exam. It is a good option for those who want to ensure their family receives a payout, regardless of when they pass away.
Universal Life Insurance
Universal life insurance is a mix of whole and term life insurance. It offers permanent coverage with a guaranteed death benefit and low monthly premiums. You can adjust your premium payments up and down each year, which can be useful for those on a fixed income. However, universal life insurance usually requires a health test, and the rates are typically higher than final expense plans.
Final Expense/Burial Insurance
Final expense insurance, also known as burial or funeral insurance, is a type of whole life insurance designed specifically to cover funeral costs. It has much lower premiums than other types of life insurance and typically only requires answering a few simple health questions. The policies build cash value, which can be used to pay for expenses such as medical bills. Burial insurance offers smaller coverage amounts, but the policy remains active for the entire life of the policyholder.
Guaranteed Issue Life Insurance
Guaranteed issue life insurance has fewer or no health restrictions, making it an option for those with pre-existing health conditions. It generally offers more expensive coverage, and the amount of coverage you can buy may be limited. However, the application process is quick, and you can get coverage faster. Guaranteed issue life insurance is a good choice for seniors who need coverage immediately.
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How much does life insurance cost for people over 70?
The cost of life insurance for people over 70 will depend on several factors, including the type of policy, the insured person's health, and their age.
Final expense insurance, also known as burial or funeral insurance, is a popular option for seniors in their 70s. These policies are used to cover funeral costs but can also be used for other expenses. They are a type of whole life policy, so they are permanent as long as premiums are paid. The premium rates are fixed, making them easy to factor into a budget, even if you live on a fixed income. Final expense policies can start at just $15 per month.
For a $50,000-$250,000 benefit, term life insurance for men over 70 can range from $50,000 to $250,000 per year, while whole life insurance can range from $50,000 to $250,000 per year. Guaranteed universal life insurance (GUL) for men over 70 can also range from $50,000 to $250,000 per year.
For women over 70, term life insurance for a $50,000-$250,000 benefit can range from $50,000 to $250,000 per year, while whole life insurance can range from $50,000 to $250,000 per year. GUL for women over 70 can also range from $50,000 to $250,000 per year.
It's important to note that these are average annual rates and that actual rates may vary depending on the insurance company and other factors.
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What are the pros and cons of life insurance for seniors?
Life insurance for seniors can be a useful tool to protect loved ones from financial strain after their death. However, there are pros and cons to getting life insurance at this stage of life, and it is not always necessary. Here are some of the advantages and disadvantages of life insurance for seniors:
Pros:
- Final expenses and debt coverage: Life insurance can help cover funeral costs, which average between $7,000 and $12,000, as well as any remaining debts, including medical bills, loans, and estate taxes.
- Income replacement: If the insured person is still working and their income is essential for their spouse or dependents, life insurance can provide financial support in the event of their death.
- Inheritance and charitable contributions: Life insurance can be used to leave a larger inheritance for loved ones or make a charitable contribution to a chosen cause.
- Estate taxes: Life insurance can help cover estate taxes for those with considerable assets.
- No medical exam required: Some life insurance policies for seniors, such as final expense insurance, do not require a medical exam, only a few simple health questions.
- Permanent coverage: Whole life insurance and burial insurance offer permanent coverage as long as premiums are paid and can build cash value over time.
Cons:
- Cost: Life insurance premiums increase with age, and health issues can make it more challenging and expensive to find affordable coverage.
- Limited options: Many insurers have upper age limits for applications, and the number of policy options available to seniors may be restricted.
- Difficulty qualifying: Qualifying for life insurance becomes more challenging as people get older, especially for term life insurance, which often requires a health exam.
- Not always necessary: If seniors have no income to replace, little debt, and financially independent family members, they may not need life insurance.
- Potential tax consequences: Cancelling a permanent life insurance policy can have tax implications if there is a significant cash surrender value.
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How do I choose the right life insurance for my situation?
When choosing a life insurance policy, it's important to consider your individual needs and budget. Here are some factors to help you choose the right life insurance for your situation:
- Age and health: The cost of life insurance increases as you get older, and any health issues will make it more challenging and expensive to find an affordable policy. If you're in your 70s, you may need to consider options that don't require a medical exam, such as guaranteed issue life insurance or burial insurance.
- Dependents and financial obligations: If you have people who depend on your income, such as a spouse or children, you may want a policy that will provide for them financially if something happens to you. Consider how many dependents you have, their ages, and any financial obligations you want to cover, such as living expenses, education costs, or outstanding debts.
- Final expenses and debts: Life insurance can help cover funeral costs, medical bills, and other final expenses. If you don't have enough savings to cover these costs, a small life insurance policy can be beneficial. Additionally, consider any debts you may leave behind, such as mortgage, auto loans, or other financial obligations.
- Estate planning: If you have a high net worth, life insurance can be used as a tool for estate planning. It can help pay estate taxes, fund business debts, or even make charitable contributions.
- Type of policy: There are two main types of life insurance policies: term and cash value. Term life insurance covers a specific period, such as 10, 20, or 30 years, and is generally more affordable. Cash value policies, such as whole life or universal life, are permanent and often include a savings or investment component. They are more expensive but offer more flexibility and can build cash value over time.
- Budget: Consider your budget and how much you can afford to pay in premiums. Term life insurance is usually the cheapest option, while permanent policies have higher premiums.
- Current coverage: If you already have life insurance, compare your current policy with any new options you're considering. Understand the features, benefits, and limitations of each policy to make an informed decision.
Remember, it's important to evaluate your unique circumstances and seek advice from a qualified professional, such as a financial planner or a fee-only insurance consultant, to help you choose the right life insurance for your situation.
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What are the alternatives to life insurance for seniors?
While life insurance is a common way to ensure your loved ones are provided for after your death, there are alternatives to this option. Here are some other ways to ensure your family is taken care of when you pass away:
Final Expense/Burial Insurance
Final expense insurance, also known as burial or funeral insurance, is a great option for seniors. It has much lower premiums than other types of life insurance, and rather than taking a health test, you only need to answer a few simple health questions on the application. These policies are used to cover funeral costs but can also be used for other expenses. Burial insurance offers permanent coverage as long as you pay the premiums, and the premium rates are fixed, making them easy to factor into your budget, even if you live on a fixed income. Policies build cash value, and you can usually take out a loan against them to pay for expenses while you're still alive, such as medical bills.
Term Life Insurance
Term life insurance is temporary and usually costs less than other types of policies. It can provide affordable coverage until you've paid off your debts. Being in good health will also help keep premiums low. However, your coverage will lapse if you outlive your policy term, leaving your beneficiaries without a death benefit when you pass away.
Whole Life Insurance
Whole life insurance doesn't expire as long as the premiums are paid and includes a cash value feature that can be used to take out a loan or pay premiums. However, it is more expensive than term life insurance, so you should ensure the premiums fit your budget.
Universal Life Insurance
Universal life insurance is a mix of whole and term life insurance. It's permanent and has a guaranteed death benefit, but it has low monthly premiums and usually requires a health test. You may be able to update your policy instead of purchasing a new one if your needs change, and some providers offer refunds for your premium payments after you've held the policy for a certain number of years.
Guaranteed Universal Life Insurance (GUL)
These plans don't require a medical test or health questions, so their rates are higher than standard universal life insurance. Acceptance is guaranteed for all seniors, but you must pay all premiums in full and on time, or your coverage may be canceled.
No-Exam Life Insurance
No-exam life insurance is a good option for seniors looking for life insurance. Most life insurance policies require a medical exam, but some companies offer no-exam policies, which typically cost more than traditional policies. No-exam policies are guaranteed issue plans, meaning the company cannot deny you coverage as long as you meet the age and death benefit requirements.
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Frequently asked questions
Life insurance is worth it for a 71-year-old if they have people who are financially dependent on them, such as a spouse, children, or other family members. It can also be useful for covering end-of-life expenses, paying off any remaining debts, and protecting your estate and beneficiaries from tax burdens.
The two main types of life insurance for seniors are term life insurance and whole life insurance. Term life insurance covers a set period, often 10 to 30 years, and tends to be cheaper. Whole life insurance covers you for your whole life and often includes a cash value component that can be borrowed against.
The cost of life insurance for a 71-year-old depends on factors such as health, sex, and the type of policy. For a healthy 70-year-old man, term life insurance with a $200,000 death benefit can range from $122 to $435 per month, while a whole life insurance policy with a $250,000 death benefit can cost between $1,122 and $2,089 per month.
