Today you can insure against more or less anything. The trick is to decide which things are worth the expense of insurance. That means weighing the risk of something happening against the need for financial help if it does. Life insurance is a special case—the risk of dying is 100%, we just don’t know when. What we have to consider at every stage of life is what need of financial help our loved ones will have.
What is a senior?
There is no definition of a senior when it comes to life insurance. All insurance companies are different. Most will start to mark up the cost of insurance significantly after 50, and some will not insure anyone over the age of 65. Others will continue to offer cover to people in their 80s.
The reason is simple. The older someone is, the greater the chance of them dying in the next year, or ten years. It is up to the insurers to decide what level of risk they want to take.
So there is no one age at which someone becomes a senior from an insurance point of view, and insurability depends on more than age. Lifestyle and medical history are equally important factors.
Why life insurance for seniors?
As we get older our needs change and so do the needs of those around us. When we have a growing family and a mortgage there is an obvious need for life insurance—we want to be sure that, if we were to die, our family would be able to continue to live in their own home without falling into poverty. When the family is grown and the mortgage is paid it may seem that the need for insurance has past.
But there are many reasons why an older person might still want to insure their life:
- Their spouse may need an extra source of money if left on their own. The old maxim that two can live as cheaply as one has a corollary: that one cannot live as well on half the income of two.
- They may want to leave a specific sum to cover funeral expenses or to pay off debts or inheritance taxes.
- They may simply want their beneficiaries to receive a substantial cash payout as a way of saying thank you.
- There could be many other reasons.
So life insurance is not something to be written off as impractical or unaffordable. If there is a reason for wanting the benefit and if it will give peace of mind for the unforeseeable future, then it should be considered.
What sort of life insurance Is available?
The main distinction is between term life insurance and whole life insurance.
Term life insurance covers you for a specified period. If you die within that period, your estate will receive the fixed amount; die a day later and there will be nothing. This is suitable if there is some clear objective beyond which, for whatever reason, the payout will not be needed. It is a less expensive option.
Whole life (or permanent) insurance will pay out the agreed amount whenever you die, provided you continue to pay the premiums. This is more expensive, but provides the assurance that your family will not miss out because an arbitrary term has expired.
There are different options within the two main bands, such as:
- Policies which will be accepted without a medical examination and those that require one.
- Policies which allow cash sums to be advanced against accumulated savings.
- Term policies which can be converted into whole life policies.
- Flexible policies allowing premiums and payouts to be altered.
How to choose life insurance?
With so many options, and so many insurers using different criteria, it can be very difficult to choose. The main thing is to decide between term and whole life insurance, and then to pursue the different routes according to the budget available.
It is possible to research life insurance for seniors over 70 online, but this can be confusing and stressful. Many of the available insurance companies will be unknown to you, and there are so many variables that it is hard to know if you are getting the best and most appropriate deal.
Getting advice
Finding the right policy at any age can be a minefield, but it can get even more complicated for older people, when the field seems to become more confusing. If you are not sure exactly what you are looking for, your best course may be to find an independent advisor to guide you through.
Lenny Robbins has worked in financial services for over 30 years; working first as a stockbroker with major NYSE brokerage firms and later owning his own firm which specialised in investments and insurance for individuals and small businesses. He has been exclusively involved in the life insurance and related areas for the last 15 years.
By Lenny Robbins
