Understanding Life Insurance Options for the Elderly
When a person reaches 85, their life insurance options narrow significantly compared to younger individuals. Standard term life policies are generally no longer an option, as they are rarely issued at this age. The focus shifts to permanent policies that offer lifelong coverage, albeit with higher premiums and typically lower death benefits due to advanced age.
Final Expense Insurance (Burial Insurance)
Final expense insurance, often called burial or funeral insurance, is a form of whole life policy designed to cover end-of-life expenses. For seniors over 85, this is one of the most accessible and practical options.
- Coverage Amount: Typically ranges from a few thousand dollars up to $25,000, depending on the carrier.
- Application Process: Simplified issue, meaning it involves answering a few health questions on an application rather than undergoing a full medical exam.
- Benefits: The policy builds a small cash value over time, and the premiums and death benefit are usually fixed for life.
- Purpose: The payout can be used for funeral costs, outstanding medical bills, credit card debt, or other final expenses, preventing the financial burden from falling on surviving family members.
Guaranteed Issue Life Insurance
For those seniors with more serious health issues who may be denied coverage elsewhere, guaranteed issue life insurance is a viable alternative. As the name suggests, acceptance is guaranteed regardless of your health status.
- No Medical Underwriting: There are no health questions or medical exams to qualify.
- Graded Death Benefit: The policy typically includes a waiting period, often two to three years. If the policyholder dies from natural causes during this time, the beneficiaries receive a refund of premiums paid, plus a small amount of interest, rather than the full death benefit. After the waiting period, the full benefit is paid out.
- Coverage Amount: These policies have lower coverage amounts, similar to final expense plans.
Traditional Whole Life Insurance
While challenging to obtain, some insurers may offer traditional whole life policies to seniors over 85 who are in exceptional health and can pass a medical exam. These policies offer higher death benefits and more significant cash value growth but come with much higher premiums.
Key Factors When Choosing a Policy
When evaluating life insurance options for someone over 85, several factors must be considered beyond just the policy type.
- Financial Need: Determine the primary purpose of the policy. Is it to cover final expenses, leave a small legacy, or address larger debts? This will dictate the necessary coverage amount.
- Health Status: The senior's current health is a major determinant. Excellent health may open up more options, while pre-existing conditions will point towards simplified or guaranteed issue policies.
- Budget: Premiums at this age can be high. The cost must be a sustainable part of the senior's budget to avoid the policy lapsing.
- Carrier Reputation: Always research the insurance company's financial strength and customer service record. High ratings from agencies like A.M. Best are a good indicator of stability.
- Waiting Periods: Be clear about any graded death benefit periods, especially with guaranteed issue plans, so there are no surprises during a difficult time.
Comparison of Life Insurance Options for Seniors Over 85
| Feature | Final Expense (Simplified Issue) | Guaranteed Issue | Traditional Whole Life (If Available) |
|---|---|---|---|
| Medical Exam | No (Health questions asked) | No (Guaranteed acceptance) | Yes (Required for approval) |
| Coverage Amount | Small, up to $25,000 | Small, up to $25,000 | High, typically $50,000+ |
| Approval | Not guaranteed; depends on health questions | Guaranteed | Not guaranteed; based on underwriting |
| Premiums | Moderate to High | High | Very High |
| Cash Value | Yes, builds slowly | Yes, builds slowly | Yes, builds more significantly |
| Waiting Period | Usually none | Yes, typically 2–3 years | None |
Leading Providers for Seniors Over 85
Many insurers specialize in coverage for older adults. Some consistently stand out for their offerings tailored to this age group:
- Mutual of Omaha: A well-regarded carrier offering simplified issue final expense policies with a high issue age, often up to 85.
- MassMutual: Known for its financial strength and dividend payouts, MassMutual offers whole life policies to applicants up to age 90, making it an option for very healthy seniors.
- Fidelity Life: Specializes in no-medical-exam policies, including final expense and guaranteed issue plans, with products available for seniors up to age 85.
- Corebridge Financial (formerly AIG): Offers guaranteed issue whole life insurance for seniors with limited health questions, ideal for covering final expenses.
How to Choose the Right Policy
Selecting the best policy involves more than just picking a type. It requires a thoughtful assessment of the senior's financial situation and wishes.
- Assess the Purpose: What is the main goal? If it's just to cover burial costs, a small final expense policy is likely sufficient and more affordable. If there are outstanding debts or a desire to leave a larger legacy, a more comprehensive whole life policy (if attainable) might be necessary.
- Gather Health Information: Be prepared to answer questions about the senior's medical history. For a simplified issue policy, this includes conditions like heart attack, stroke, or cancer. For a guaranteed issue policy, no health information is needed.
- Compare Quotes: Premiums can vary significantly between carriers. An independent agent or online comparison tool can help find the most affordable option for the desired coverage amount.
- Review the Fine Print: Pay close attention to waiting periods, especially with guaranteed issue policies, and understand exactly what is covered and when.
The Application Process
The process for applying for senior life insurance is typically straightforward:
- Contact a Carrier or Broker: You can work directly with an insurance company or use a broker specializing in senior coverage.
- Complete the Application: For simplified issue, this means answering a health questionnaire. For guaranteed issue, you just need to meet the age and residency requirements.
- Review and Sign: The policy is issued once the application is approved, and you can begin paying premiums.
Is It Worth Buying Life Insurance Over 85?
Some may question the value of purchasing life insurance at such an advanced age, given the high cost. However, the peace of mind that comes with knowing final expenses are covered can be invaluable for both the senior and their family. The decision ultimately depends on individual circumstances and financial goals.
For a deeper look into a specific provider and their offerings for older adults, consider reviewing their website for detailed policy information.
Conclusion
While the options for life insurance become limited and more costly for seniors over 85, viable solutions like final expense and guaranteed issue policies exist. The key is to assess the specific needs—whether covering a small financial gap or ensuring final expenses don't burden loved ones—and choose a reputable carrier with the right no-medical-exam plan. Prioritizing peace of mind through a manageable policy can provide a sense of security for everyone involved.
