Why seniors may still need life insurance

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Life insurance is most often used to replace lost income if the breadwinner of a family dies and to make sure mortgages, retirement and college savings are protected. Once you outgrow these financial obligations and your kids are out of school and your mortgage is paid off, life insurance generally becomes an unnecessary expense.

However, some seniors might have outstanding financial obligations they want to protect. Maybe you cosigned loans, for example, or want to ensure your funeral expenses are paid-for. Seniors don’t need a large death benefit, and won’t need coverage for the 30 years that’s common with younger term-life insurance applicants. But that doesn’t mean they don’t need insurance at all. In fact, as we mentioned, there are several reasons why seniors might still need life insurance.

  • You still have unpaid debt. Maybe your mortgage isn’t quite paid off, you still have a few more working years to before you retirement plan is complete, or you have co-signed credit card debt. Your loved ones will be responsible for any debt you share, and life insurance can help ease that burden. 
  • You want to cover end-of-life arrangements. Even if you have all your debt covered, you might not have considered your final debts: end-of-life expenses. Costly medical bills can be passed to family members, and funeral expenses can be upwards of $10,000 (which is when this guide on funeral expenses you can skip can come in handy). Covering this with life insurance means it won’t be left for a family to deal with in a time of grief.
  • You want to leave an inheritance. Retirement can be expensive. The death benefit from life insurance can be a way to leave a little something extra behind for kids or grandkids — or, in some cases, cover the estate tax so a family gets your full inheritance.

To get an idea of how much insurance coverage you’ll need, try this free life insurance calculator.

Finding the right coverage for you

If you decide you need life insurance, now it’s time to figure out what type to get. It gets more expensive the older you get, so you should set your expectations accordingly and be aware that if you’re buying insurance in your 60s, 70s or 80s, you won’t find the same competitive premiums you would have when you were younger. Not everyone will qualify for every type of life insurance, as you’ll read about below. A life insurance company can reject an applicant for being too unhealthy, or for requesting a large death benefit from a policy type that avoids the medical exam. However, you should never assume you’ll be rejected. Always try for the most affordable option and move to the next best option if you are rejected. 

Term

A standard term life insurance policy should be the first option for anyone looking for coverage, whether they’re in their 30s or 70s. Term life will almost always be the most affordable option. It also provides high coverage options; policies can go all the way up to $10 million, even though most people won’t need nearly that high of a death benefit. Term insurance gets more expensive the older you get, but for comparable coverage amounts it will almost always be cheaper than other types of policies. Unfortunately, because it relies on a medical exam to set premiums, term insurance can be difficult for older applicants to qualify for. Because senior citizens are at higher risk for health conditions, they may get rejected (or should be diligent about finding the company that will accommodate their health status).

Simplified issue

This allows applicants to skip the medical exam in exchange for a health history check and answering some health questions. This can be good for people in moderately good health who want to avoid the medical exam and only need a small amount of coverage to see them to retirement. However, coverage amounts are limited; many life insurance companies may not offer simplified issue term policies for death benefits over $300,000. There can also be age limits; some simplified term policies don’t accept applicants over age 65. Applicants have to be low-risk enough to qualify and coverage isn’t guaranteed. You can read this guide to learn more about simplified issue life insurance

Final expense insurance

Applicants who are no longer in their 60s and who don’t qualify for term or simplified issue insurance might find luck with the slightly more expensive final expense insurance, which provides low coverage amounts for end-of-life expenses. Final expense life insurance plans have a benefit limit of $50,000 but don’t expire like a term policy does; that means that it offers enough coverage to cover medical and funeral costs and not much else. Applicants can skip the medical exam for a health questionnaire, but while the process is a little more lenient than a simplified issue policy, seniors who are in poor health may still get rejected. You can read more about final expense insurance here.

Guaranteed issue life insurance

For applicants over 80, this may be the only option available. It has essentially guaranteed acceptance and doesn’t look at pre-existing conditions. It should also be viewed as a last resort for most people, as it provides very low coverage amounts — usually under $25,000. Again, that’s fine for anyone looking to cover last-minute debts or leave a small nest egg behind. But guaranteed issue insurance also has some of the most expensive rates of the options discussed here. Want to know more? Check out this primer on guaranteed issue life insurance.

This article originally appeared on Policygenius and was syndicated by MediaFeed.org.

Featured Image Credit: PeopleImages.

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