Life Insurance At 71: Easy Or Challenging?

Life insurance is a way to help your loved ones cover the costs of your final expenses, such as funeral costs, unpaid medical bills, and any remaining debt. While it is possible to get term life insurance at 71, it can be challenging and expensive. After the age of 71, most well-known life insurance companies stop offering term life insurance, and the rates for whole life insurance are very high. If you are 71 or older, your best option is a 10- or 15-year term policy or a guaranteed universal life (GUL) policy, which provides coverage based on age rather than a specific term.

Is term life insurance necessary at 71?

According to the National Center for Health Statistics, a healthy 65-year-old has a 50% chance of living past 85 years. So, if you're 71 and still in good health, you could have many years ahead of you. While term life insurance for seniors over 70 isn't always necessary, it can be very possible to obtain if you need it.

When you might not need it

You may not need term life insurance if:

• Your mortgage is paid off.
• You don't have any major financial obligations, such as properties, boats, or cars.
• You have enough savings to cover your burial expenses.
• Your children are grown up and don't depend on your income.
• You already have a sufficient policy in place.

When you might need it

However, you may still want to consider term life insurance if you want to:

• Leave a financial gift for your family or grandchildren.
• Ensure your final expenses, such as funeral costs, are covered.
• Help your loved ones pay off any debts you leave behind, such as medical and long-term care bills, mortgage, auto, and personal loans.

If you decide that you need life insurance, there are several options available to you, including term life insurance, whole life insurance, and guaranteed universal life insurance. Term life insurance provides a death benefit for a fixed premium over a set period, while whole life insurance offers lifelong protection with a guaranteed death benefit and the accumulation of cash value. Guaranteed universal life insurance (GUL) is a mix of the two, offering permanent coverage with a guaranteed death benefit and lower monthly premiums, but without the cash value build-up of whole life insurance.

The cost of life insurance for a 71-year-old will depend on several factors, including your health, lifestyle, and the type of policy you choose. For a 10-year term life insurance policy, a 70-year-old woman can expect to pay around $70 per month, while a man will pay around $120 per month. These rates will likely increase for those aged 71 and over. For a guaranteed universal life insurance policy with coverage up to age 90, 95, or 100, a man in excellent health can expect to pay around $1,377 to $1,590 per month for a $500,000 death benefit.

In summary, while term life insurance at 71 is not always necessary, it can be a valuable tool to provide financial security for your loved ones and ensure your final expenses are covered. The best option for you will depend on your individual circumstances, and it's important to compare policies and seek advice from an independent agent to find the most suitable and affordable coverage for your needs.

What are the alternatives to term life insurance?

While term life insurance is a good option for those over 70, it may not be necessary or possible for everyone. Here are some alternatives to term life insurance to consider:

• Income protection insurance: This provides monthly, tax-free income if you are unable to work for an extended period due to illness or injury. It is available in terms ranging from 12 to 60 months and typically pays between 50% to 70% of your earnings. There is usually a deferral period of 4 to 26 weeks before payments start.
• Guaranteed coverage plan: This type of insurance does not require a medical exam or records. You are generally eligible for coverage unless you exceed the age limit set by the insurer, typically between 50 and 80 years old. It can be a good alternative if you have been denied standard life insurance due to medical factors, but it may have high premiums and a lower death benefit.
• Critical illness insurance: This provides a tax-free lump sum if you develop a life-threatening illness. It is designed to replace income rather than provide a death benefit. Some policies have no waiting period, allowing you to use the money immediately for treatment or living expenses during recovery. Coverage amounts vary depending on the premiums, with low-premium policies offering a lower benefit and covering a limited list of illnesses.
• Accidental Death and Dismemberment (AD&D) insurance: This covers fatal accidents or the accidental loss of a limb. It does not consider your medical history or lifestyle choices, so you may qualify even if you would be disqualified for life insurance. In the event of a covered incident, you will receive a tax-free lump-sum payment. The premiums for AD&D insurance are typically very affordable.
• Mortgage protection insurance: This type of insurance pays off the remaining balance of your mortgage if you pass away or become disabled and unable to work. The payout covers the mortgage principal and interest, going directly to your mortgage lender. While this won't leave anything for your loved ones, it ensures that your home is not lost. You may be able to add a rider to your policy to help cover other expenses.
• Pre-paid funeral plan: A pre-paid funeral plan covers the expenses associated with a funeral, so your beneficiaries don't have to worry about these costs. The median cost of a funeral is $8,300, and pre-paid funeral plans typically range from $10,000 to $25,000. You can choose to pay upfront or in monthly installments.
• Asset-based long-term care insurance: This hybrid insurance combines long-term care coverage with an investment component. The investment component involves investing premiums into a fixed or variable annuity, which builds cash value over time. This cash value can then be used to pay for long-term care services, and any remaining proceeds can be passed on to beneficiaries. These policies are highly customizable, allowing you to choose the amount of coverage, term, and type of investment.
• Employer-issued insurance: Some employers offer insurance as an optional benefit for employees, sometimes providing a minimum amount of coverage at no cost. If you are working, it is worth checking if you are eligible for this type of insurance.
• Self-funded savings: Instead of insurance, you can create your own savings to provide for your loved ones. This could involve putting money into a savings account or reallocating your portfolio to maximize interest.

How to get the best rates on term life insurance at 71?

How to Get the Best Rates on Term Life Insurance at 71

When you're 71, finding affordable senior life insurance can be challenging. However, it's still important to have coverage to help your loved ones cover any final expenses. Here are some tips to get the best rates on term life insurance at 71:

Compare Different Policies and Prices

Don't settle for the first option you find. Take the time to research and compare different policies from various insurance providers. Consider the type of policy, such as term life insurance, whole life insurance, or universal life insurance, and their respective benefits and costs.

Consider Final Expense Insurance

Final expense insurance, also known as burial or funeral insurance, is a great option for seniors in their 70s. These policies have much lower premiums than other types of life insurance and usually only require answers to a few simple health questions on the application. The funds from these policies can be used for funeral costs and other expenses.

Work with a Broker

Engage the services of a broker who represents multiple insurance companies. A broker can help you navigate the complex underwriting criteria of different companies and find the best option for your needs, all at no additional cost to you.

Start Your Search Early

The earlier you start looking for term life insurance, the better. At 70, you may be able to find a 20-year policy, but if you wait until you're 72, your options may be limited to 15-year policies. The longer you wait, the shorter the term and the higher the cost.

Maintain Good Health

Staying healthy will not only benefit your well-being but also positively impact your insurance rates. Most term life insurance policies will require a health exam, especially for death benefits greater than $250,000. By maintaining good health, you increase your chances of obtaining a favourable health assessment and securing better rates.

Avoid Certain Companies

Be cautious of companies like Globe Life or Colonial Penn, which offer modified term life insurance that changes every five years as you get older. These policies may not provide the stability and consistency you're looking for in your insurance coverage.

What are the pros and cons of term life insurance at 71?

Pros of Term Life Insurance at 71

• It is possible to obtain term life insurance at 71, and it is an affordable option compared to whole life insurance.
• Term life insurance can provide a death benefit for a specified period, which can help cover income loss and assets for your spouse or heirs.
• The premiums for term life insurance are based on age, health, and life expectancy, so you can secure a lower premium if you are in good health.
• It can be used as an essential tool to provide a financial gift or legacy to your beneficiaries.
• It is a good option if you still have financial obligations, such as a mortgage, or if you want to cover burial expenses.

Cons of Term Life Insurance at 71

• The term length options are shorter for individuals over 70, typically offering only 10 or 15-year terms.
• Most policies will require a health exam, especially for death benefits greater than $250,000, and it may be challenging to qualify if you are not in good health.
• Term life insurance does not have a savings component like permanent life insurance, so there is no payout if the policy expires before your death or if you outlive the policy term.
• The premiums increase with age, so the cost of term life insurance at 71 will be higher than if you had purchased it at a younger age.
• There is no investment or savings vehicle included with term life insurance, so you are paying premiums without building cash value.

How long does term life insurance cover at 71?

If you are 71 years old or older, you will typically find term life insurance policies with 10- or 15-year terms. Some companies may offer 20-year terms, but these are less common.

Term life insurance policies are generally sold in lengths of 5, 10, 15, 20, 25, or 30 years. The length of your term life insurance policy will depend on various factors, including your age, financial situation, and the length of your financial commitments.

Factors Affecting Term Life Insurance Length

• Age: Older adults in their 70s are often not eligible for 30-year terms and may qualify for shorter terms of up to 10 or 15 years.
• Financial situation: The length of your term policy should be based on your financial responsibilities, such as mortgage payments, loans, or supporting dependents.
• Health: Most term life insurance policies for seniors over 70 will require a health exam, especially for death benefits greater than $250,000.
• Cost: Longer term lengths result in higher premiums because the likelihood of a payout increases with age.
• Conversion options: Some term policies include a conversion rider, allowing you to change your term policy into a permanent policy without a medical exam. This can be useful if you develop health issues and still need coverage after your term policy ends.

Alternatives to Term Life Insurance

If you are seeking longer protection, you may consider a guaranteed universal life (GUL) policy, which provides coverage based on age rather than a specific term. GUL policies can offer protection up to ages 90, 95, 100, 105, 110, or even 121. However, the longer the age, the more expensive the policy will be.

Another option is annual renewable term life insurance, which allows you to renew coverage annually for a set period without reapplying. However, premiums typically increase with each renewal.

Additionally, final expense or burial insurance is a type of whole life insurance with lower premiums and no health test required. It is designed to cover funeral costs and other end-of-life expenses, with coverage limits typically capped at $10,000 or $25,000.

When considering term life insurance at 71, it is important to compare policies and prices to find the right option for your needs and budget.

Frequently asked questions