As individuals approach their later years, the consideration of end-of-life planning becomes increasingly important. For seniors over the age of 85, securing life insurance is a common goal, often to cover final expenses and ease the financial burden on loved ones. While the options for this age group are more limited compared to younger applicants, it is still possible to obtain coverage. This guide outlines the key considerations and available insurance products for those seeking to purchase a policy after the age of 85.
The Reality of Life Insurance for Seniors
It is important to understand that traditional life insurance policies, such as term life insurance or universal life, are generally not available to new applicants after a certain age, often in the late 70s or early 80s. This is primarily due to the increased health risks associated with advanced age, which insurance companies factor into their risk assessment models.
However, a specific type of policy known as Final Expense Life Insurance is designed to meet the needs of older applicants, including those over 85. This policy is essentially a simplified form of whole life insurance.
Understanding Final Expense Insurance
Final expense insurance is a whole life policy with a smaller death benefit, typically ranging from a few thousand dollars up to $50,000. It is specifically intended to cover end-of-life costs, such as:
- Funeral and burial services
- Medical bills and outstanding debts
- Cremation costs
- Other final arrangements
The key features of final expense insurance for seniors are:
- Guaranteed Coverage: Once issued, the policy remains in effect for the rest of your life, as long as premiums are paid. The death benefit is guaranteed to be paid to your beneficiaries.
- Fixed Premiums: The premium amount is locked in at the time of purchase and will not increase over time.
- No Medical Exam: Unlike many other life insurance policies, final expense insurance does not require a physical medical exam. Applicants typically only need to answer a few health-related questions on the application form.
Available Options and Application Process
For seniors over 85, the choices for life insurance are highly specialized. The market is very narrow, with only a handful of insurance companies in the United States willing to issue new policies to applicants up to the age of 90. Because of this, purchasing a policy often requires working with an experienced insurance broker who has a deep understanding of this niche market.
The application process is also tailored to this specific age group:
- Verbal Application: Applications for seniors over 85 cannot usually be completed online or by mail. They require a verbal interview with a licensed insurance agent, which is typically conducted over the phone. This allows the agent to guide the applicant through the health questions and ensure the information is accurate.
- Health Questions: While a medical exam is not required, you will be asked a series of health questions. The answers to these questions will determine your eligibility and premium rate.
- No Waiting Period (Generally): A significant advantage of many final expense policies for seniors is that there is no waiting period. If approved, the coverage begins immediately upon the first premium payment, and the full death benefit is available from day one. This provides immediate peace of mind. However, some policies may have a waiting period, so it’s crucial to clarify this with your agent.
Cost of Coverage
It’s important to be prepared for the cost of final expense insurance for seniors over 85. Premiums for this age group are high compared to those for younger individuals. This is because the insurance company is taking on a greater risk due to the applicant’s advanced age. The premium is calculated based on factors like:
- Age
- Gender
- Health condition
- Tobacco use (smoking, chewing tobacco, etc.)
While the monthly cost may seem high, it can be an invaluable investment in providing for your loved ones and ensuring your final wishes are honored.
Important Policy Details to Understand
When considering a final expense policy, be aware of a few key details:
- Incontestability Clause: Most life insurance policies have an incontestability clause, which allows the insurance company to investigate claims if the insured passes away within the first one to two years of the policy being in force. They can investigate for fraud, but after this period, the policy is generally considered incontestable.
- Alternative Options: If life insurance is not the right fit, you can also consider other non-insurance options for funeral planning, such as creating a pre-need funeral plan with a funeral home, or setting aside funds in a separate account for your beneficiaries to access.
Conclusion
For seniors over 85, acquiring life insurance is a tangible way to provide a financial safety net for family members. While the options are specific and require working with a knowledgeable broker, final expense insurance offers a viable solution. By understanding the nature of these policies, the application process, and the associated costs, you can make an informed decision that secures your legacy and provides comfort to your loved ones in the future.