Life insurance is available for purchase at almost any age, but there are some special considerations when applying to purchase life insurance for seniors over 80. These choices are dependent upon the amount of coverage desired as well as the general health of the proposed insured.
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While there are exceptions due to State insurance regulations, most people over 80 can purchase a policy that will last their lifetime with no increase in premium cost as long as they haven’t reached their 90th birthday before application. The least expensive option is known as a “guaranteed level premium” universal policy. To qualify for this coverage, an applicant must be in relatively good health, undergo a paramedic exam and have bodily fluids taken for laboratory results. Coverage amounts start at $25,000 or $50,000 depending upon the applicant’s State of Residence. Premiums are based on age and health category which in turn describe the health risk from “super preferred” to “standard” and higher. These are the same policies issued at lower ages with some additional requirements to confirm the applicant’s mental competency.
If an applicant needs less coverage than required for a universal policy, typically less than the $25,000 mentioned above, the best choice may be a “simplified issue” policy which only requires that all qualification questions are answered in the negative. Each policy has two portions. The first set of questions will determine if you can qualify for the policy. Questions include both mental and physical issues. Should you answer all correctly, there is a second set which will determine if coverage starts immediately or there is either a wait time for death benefits or in some cases a partial benefit is available. While this type of insurance may have a waiting period, there is no wait if death occurs from an accident as long as the accident does not occur due to a health issue.
Not all simplified issue policies ask the same questions, and so it’s possible to obtain coverage from one company and not another. Also, prices for all coverage can vary significantly from carrier to carrier, so make sure to ask your agent for a comparison of premiums based on your need, and any health issues you may have.
In the event that you cannot qualify for any of the policy types mentioned, then your last choice is “guaranteed issue life insurance.” If the proposed insured can sign their name, then coverage will be issued. The death benefit is only paid after a 2-year wait. However, all premiums plus interest are paid back to the owner of the policy should the insured die within this period. Considering that many seniors who apply for guaranteed issue policies are on fixed incomes, the return of all premiums is an important benefit to discuss with the policy owner.
Most of these policies will insure anyone from age 40 to 80, while at least one carrier now has increased the age for application to 85.
Another word of advice for the children of seniors over 80. If your parent is in reasonably good health, the cost of fully underwritten policies are approximately 40-50% less than a simplified issue policy. Even if you only need a small policy below $25,000, you may be significantly better off with a fully underwritten life insurance policy at a higher amount for a similar premium.
If this all seems too complicated there is one method that will help you to make sure you’re on the right track. Find an independent agent (that’s a licensed professional who is able to represent multiple insurance companies) and discuss your objective with that person. You’ll know you’ve found good advice when your questions are answered. Look for an agent that you are comfortable with and who will show you why a particular policy is your best value.
Lenny Robbins has spent his entire business career in financial services. He was a VP of Oppenheimer & Co., Inc. prior to starting his own securities broker/dealer. In 1991 he founded lifenet insurance solutions which specializes in life insurance for seniors and baby boomers.