Life insurance. When should you get it? Is there such a thing as too young or too old? In reality, a life insurance policy can be handy whether you're younger or older. And if you just so happen to be a senior, getting permanent life insurance could be a savvy move.
Here’s why.
Can you get a permanent life insurance policy as a senior?
Absolutely. While many think of this mythical cut-off age for life insurances, most people can still take out a policy well into their 80s.
Life insurance can still provide a safety net for you and your family when they need it most. Plus, not all seniors have the benefit of paying off their mortgage and bills later in their life. In 2016, 61% of Americans over the age of 65 were in debt, and getting a life insurance policy could protect loved ones from inheriting any unnecessary baggage.
Additionally, over 70% of individuals need long-term care sometime in their life, and these costs are often not covered by health insurance. Not wanting to have to burden a loved one in possibly having to take care of you later in life? You can take out your life insurance policy in cash in the event of a chronic, critical, or terminal illness.
All of a sudden, life insurance looks more appealing. And the truth is that it can come in handy whether you are financially sorted later in life or not. Even if you’ve successfully raised your family and are now enjoying retirement, there are life insurance options that you can use to cover things like funeral expenses while also accessing emergency funds when you need it the most.
Life insurance by age
Over 60s
Entering your 60s is usually a time to start thinking about retirement. Therefore, a life insurance policy will look considerably different than if you're in your 50s or younger. This is generally the age range where you stop working, living expenses decrease, and your health becomes more vulnerable.
That’s why your 60s are a time to think about a permanent life insurance policy. It doesn’t just cover your loved ones with a death benefit–you can also access some tax-free emergency cash through the cash-value aspect (more on that shortly).
Over 70s
As you enter your 70s, there are still plenty of life insurance options available. The only real restrictions are around term policies longer than 20 years. The policy you opt for will mostly center around your financial situation and the cost of coverage.
Factors that you might want to consider are whether you’re prepared for funeral and end-of-life expenses, medical expenses, pension replacement, and estate taxes. These can be tens to hundreds of thousands or more in costs that you’re leaving behind that can be mitigated through a permanent life insurance policy.
Worried about qualifying for health reasons? Not to worry, there are guaranteed issue policies that requires zero underwriting. That’s right, only 5 minutes and you’re covered.
Over 80s
A permanent policy can be a smart choice if you’re over 80, as it lasts for the rest of your life. That’s handy because getting life insurance in your 90s is incredibly hard. Your health will play a major factor in the policies available to you in your 80s: if you’re relatively healthy with no significant medical issues, you should be able to get a permanent policy that’s relatively cost-efficient. Otherwise, you’ll still be able to get covered with guaranteed issue policies.
During your 80s you should definitely look at life insurance riders. You can add conditions to your policy, such as an accelerated death benefit, accidental death, and waiver of premium. With an accelerated death benefit, for example, you have the option to receive a portion of the death benefit early if you're diagnosed with an illness.
Is life permanent insurance for seniors more expensive?
Unfortunately, you will need to pay more for a permanent life insurance policy if you’re a senior. Life insurance costs grow with age – and the older you are, the more you can expect to pay.
However, if you're in good health, don't smoke or have an alcohol dependence, and don't have any previous serious medical conditions, you'll still be able to find competitive coverage that protects you and your family.
There are also some other aspects to consider when factoring in the cost. Some life insurance providers give you coverage that’s effective immediately. Others, however, won’t pay the death benefit if you die within the first two years of the policy. Therefore, you should always check with the company about the specific details regarding permanent life insurance for seniors.
What if I have a medical condition?
You can still benefit from permanent life insurance for seniors even if you have a medical condition. The insurance company looks at your individual circumstances and reviews your overall health. They'll decide whether or not you qualify and may modify the plan based on your circumstances.
Regardless of your age and health, permanent life insurance is usually more expensive than term coverage. That’s because it doesn’t expire, and the benefits include locked-in premiums: if you start your policy at 65, you’ll still be paying the same premium at 85.
What about a term policy?
Permanent life insurance for seniors tends to be a more popular option than term coverage. However, term options are generally still available even into your 80s. With each decade, the length of coverage you can get reduces–at 80, it’s unlikely that you’ll be able to get a policy for longer than 10 years.
Term coverage can be handy if you are experiencing financial issues later in life and you don’t want to burden your loved ones with funeral costs. However, unlike a permanent policy, there are no benefits while you’re still alive. Therefore, you will only pay for the term that you're covered for.
Benefits of permanent life insurance
Covering your loved ones after you pass can relieve the financial burden for them, but a permanent policy can also help you out while you’re still alive. That’s because it grows in cash as you pay your premiums. That way, you can access some emergency cash from your policy later on, or just leave behind an even greater death benefit for your family. Oh, and it’s tax-free.
Cash value
When you pay into your permanent life insurance policy, you'll cover two pots: the death benefit and cash value. Both of these pots grow in wealth over time, and the cash-value element can be accessed for whatever you want while you're still alive. Think of it as an investment vehicle, and you'll start to get the picture of the benefits of permanent life insurance.
In conclusion: permanent life insurance for seniors
Getting a permanent life insurance policy is for anyone who wants to make smart investments for their future–whether it's in 30, 15, or even 5 years' time. With tax-free cash accumulation and a death benefit, you can cover all bases and enjoy retirement with the extra benefits brought on by permanent life insurance.