How to Find Life Insurance for Elderly

While most expect young people with dependents or significant assets to acquire life insurance, they don’t always see the need for life insurance for the elderly. However, an elderly person, and his or her beneficiary, can benefit from a life insurance policy in many ways. The death benefit paid to the beneficiary or beneficiaries can be used to cover final expenses, to pay outstanding credit card balances or debts, property taxes, or a mortgage. It can also be used for a grandchild’s college education. For an elderly person with few or no assets, a life insurance policy can provide peace of mind knowing that family will not be burdened with debt or other financial responsibilities.

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What Type of Life Insurance Policy is Best for an Elderly Person?

There are three primary types of life insurance best suited for the elderly: whole life, guaranteed issue (or acceptance), and term life.

Whole Life Insurance

Many life insurance companies offer permanent whole life policies for the elderly that cover the basic expenses associated with a funeral and burial. A whole life policy is one that remains in force for the person’s entire, or whole, life and also builds cash value. Most of these policies are also sold as “simplified issue” policies. While most applicants will be required to answer several health questions, this type of policy does not require a medical exam prior to issue. Coverage ages vary by state and depend on the issuer of the policy, but policies are available to cover those between the ages of 50 and 95. The death benefit, the amount paid to the beneficiary or beneficiaries, typically ranges between $2,500 and $30,000. With most whole life funeral and burial expense policies, the premium remains the same as long as the policy is in force. As the average funeral now costs over $7,000, this type of policy can be a great help to any family.

Guaranteed Issue Life Insurance

Guaranteed issue, or guaranteed acceptance, is a permanent life insurance policy. A permanent life policy is one that cannot be cancelled as long as the premiums are paid. Guaranteed issue may be the best type of policy for an elderly person with a history of health issues such as heart disease, stroke, diabetes, high blood pressure, or cancer. While elderly people with a history of serious medical conditions will still likely qualify for guaranteed issue life insurance, the death benefit is not paid to the beneficiary or beneficiaries in full if death occurs within the first two years. Coverage ages vary by state and depend on the issuer of the policy, but most policies cover those between the ages of 50 and 90.

Term Life Insurance

Unlike permanent life insurance, term life is issued for a specific time period. The term and the death benefit vary by state, but typically fall between 5 and 30 years and $2,500 to $2,000,000 respectively. The term available for an elderly person depends on his or her age at the time the policy is written. The premium is lower than that of permanent life and is fixed so the insured will not pay an increase while the policy is in force. While term life insurance is the simplest and least expensive form of insurance, it does not build cash value and is considered mature when the term has ended or the death benefit has been paid. For that reason, most issuers will attempt to convert a term life policy to a whole life policy. If an elderly insured believes he or she will live longer than the term, and wishes to remain insured, it may make sense to convert the policy, as he or she may be too old to renew the term insurance past the age allowed.

What Should an Elderly Person Expect to Pay for Life Insurance?

Insurance premiums for the elderly are based on the same factors that determine a younger person’s premium: Age, health, sex, lifestyle choices and driving record. Each plays a different role depending upon the type of policy requested.

An Elderly Insured’s Age

This is the most straightforward aspect of life insurance. The older a person is at the inception of the policy, regardless of the type of policy, the higher the premium will be.

The Health Status of an Elderly Insured

Term and whole life insurance for the elderly are less expensive if the applicant is in excellent health. A healthy individual will usually be quoted a “super preferred” or “preferred” premium. An individual with minor health issues, such as high blood pressure, might be quoted a “standard” premium. Elderly people with significant health issues may not qualify for a term life or whole life policy. For these applicants, guaranteed issue may be the only option available.

Male and Female Insurance Rates for the Elderly

Just as with life insurance policies for younger people, all things being equal, a man will pay more for life insurance than a woman will. Insurance companies use actuarial tables to determine the statistical probabilities of paying death benefits. Because a woman, on average, has a higher life expectancy and will pay over a longer period of time, she will pay a smaller premium.

Lifestyle Choices Such as Smoking

One of the easiest ways to reduce a life insurance premium is to quit smoking. On average, smokers pay two to three times more than non-smokers. Lower life insurance premiums are available to those who have been tobacco-free for at least 12-36 months.

The Driving Record of an Elderly Insured

An insurance company will consider anyone with a significant number of moving violations or a driving while under the influence charge to be a high risk. An elderly person who does not have a clean driving record will not only face a higher premium, he or she may be denied coverage altogether.

Life insurance for elderly people can provide financial stability for those left behind. An elderly person has several viable options when choosing the life insurance policy that best fits his or her needs.

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