I want to start by sharing a story about a client of mine from Albany, Georgia. I’ll refer to him as “Mr. Hammond.”
At the time I met Mr. Hammond a few years back, he was 85 years old. He was retired from a school system in Arizona, as well as the military, and drew pensions through both.
In his early 80s, he lost his first love, of which he had been married for over 50 years. Mr. Hammond shared a lot of happy memories of his late wife and the life that they had together.
Life Insurance After 80: Case Study
Here’s why I mention Mr. Hammond’s story.
Through the experience of losing her, he learned how important it was to have life insurance, especially over the age of 80.
And that’s why he decided that he was going to carry as much life insurance as he could reasonably afford, as he was concerned about the ever-increasing costs of final expenses, in addition to replacing his income for his new spouse he had married earlier that year.
When I first met Mr. Hammond, one of the main concerns about life insurance was actually being able to qualify!
He had heard all sorts of information on TV, about different kinds of life insurance options available… but he was a bit skeptical. He had a mini-stroke 10 years earlier and took blood-thinning medications, which made him wonder just how eligible he’d really be for life insurance coverage.
An Unexpected Surprise…
When I first met him and reviewed his health history, I was happy to report we should be able to qualify him for a life insurance plan, at preferred pricing with first-day full coverage, too.
To say Mr. Hammond was happy was an understatement!
And in a quick 20 minutes, we approved him for significant coverage, having enough life insurance to take care of the entire costs of burial and leave a lump sum benefit behind for both his children and wife.
Bittersweet Outcome For Mr. Hammond
Unfortunately, Mr. Hammond died six months later.
Despite his loss, I am happy to report that his life insurance company lived up to its promise. They paid off the entire amount of coverage.
I was happy that my coverage gave peace of mind to him on his passing, knowing that his wife and kids were adequately covered and things would be taken care of.
He had no worries about burial costs or cremation costs. No fights among family members to come up with the final arrangements.
His action to take coverage out took care of that entirely and that entire burden was lifted in a heartbeat.
Is Life Insurance Over 80 Worth It?
The National Funeral Directors Association shows that the average funeral cremation costs in 2017 are $8,755.00. This has escalated 20 percent in the last 10 years compared to past figures.
The point me mentioning this is that funeral costs continue to go higher and higher with each passing year.
People want assurances that there’s going to be enough coverage to take care of final expenses. They don’t want to leave a final burden either to a spouse or to children.
And usually, the problem is centered on the concern of not having enough funds to take care of those final expenses.
Even if you’re looking at cremation as an alternative to a high cost of burial, cremations are going up every year as well.
The entire cost average for cremation is over $6000, which continues to increase year-over-year, with no end in sight.
Regardless of wanting a cremation or traditional burial, you’re likely going to need some kind of life insurance plan in place to take care of that.
A Case-Study About An 83-Year Old Life Insurance Client
I have one client who has exactly the same concerns Mr. Hammond had. He did fine enough in preparing for retirement and had a fixed income.
But, he felt he didn’t make as much as he used to when he was working. He knew it was necessary to have a pre-defined plan to take care of these funeral arrangements.
My client didn’t want any disagreements over what portion of her money would be used towards her death. Also, she wanted to prevent her surviving kids from arguing who would get what portion of what remained.
She recognized this would bring ill will and negative feelings. And the policy she took out eliminated that risk, reducing hat ill will feeling towards other brothers, sisters or other survivors that may feel that they deserve more than an equal share.
Life Insurance For Income Replacement Over 80
Another reason why somebody buys a final life insurance plan over the age of 80 is income replacement.
Usually, this is because there’s the potential for a spouse to live beyond the life of the person, but with a negative change in lifestyle. The death of the first spouse would dramatically affect how the surviving spouse would live day-to-day.
Income Replacement Case Study for Over 80
Take for example a client of mine, to who I will refer as Mrs. Jones.
Mrs. Jones lives in Charleston, South Carolina. Upon getting a rate increase for her life insurance coverage, she was very concerned about having adequate life insurance that she could afford.
Mrs. Smith worked as a professional at a telecommunications company throughout her life and retired with a sizable pension. Her husband worked as a self-employed laborer and receives minimal social security. If she were to pass away her pension is not transferable.
And what would happen is that the surviving spouse would go from living on approximately $3000 a month in combined income to just $800.
Imagine yourself in that situation going from $3000 dollars a month down to $800. Could you survive? Could your spouse survive on that kind of income? What would happen to your lifestyle? Would you have to move out of your house? Could you even afford the basic bills that you are accustomed to now?
This is where the beauty of a life insurance plan comes in place for a person 80 or older.
All one has to do is find a plan that they qualify for, get approved for it and then whatever amount is left over can be gifted or can be paid off as a beneficiary being the surviving spouse.
They can take that money and use it for anything they want to, whether that’s to pay off a burial or just to set aside a bank account to take care of additional expenses.
This is why Mrs. Johns decided to apply for a plan for coverage. She wanted to make sure that, in her case, if she passed away there would be adequate coverage left over to take care of those final expenses.
Leave Behind A Legacy
In many cases, for people over the age of 80, life insurance is purchased for the benefit of a child or a grandchild. Take for example Mrs. Jones from Georgia.
She’s been a client of mine for a long time. She’s in her 80s and approached me because she had a quandary.
You see, she had a lot of land but very little cash. Upon her passing, her land was arranged to be gifted. One of her family members was to receive a sizable amount of that land.
She wanted to give a cash benefit to the surviving grandchild so she could rearrange the payout in a way that was more equitable between the survivors. Mrs. Johns didn’t want there to be a fight over who got what.
Her grandchild wasn’t interested in parceling out some of that land and figured a life insurance plan that would pay a cash benefit plan and a guaranteed amount was a better deal for him.
Therefore, she decided to take out the life insurance plan to better arrange her legacy so that her child would get the land and that her grandchild would get the cash benefit. This gave her the peace of mind she was looking for and was much happier with this arrangement.
So, if you’re looking for some kind of plan to help you manage out a legacy or to help manage a fair and equitable distribution of your assets, life insurance can be a great role in playing that out.
Types Of Life Insurance Available For Seniors 80 And Over
Now that we know the main reasons people buy life insurance, let’s shift gears and talk about what are the most common types of life insurance for people over the age of 80.
The most common product for people over the age of 80 is what’s called Whole Life Insurance. Whole life insurance is what we normally call permanent insurance.
Whole life insurance products typically have rates that never increase. They are guaranteed from the moment the policy is taken out and the coverage never cancels due to age or health.
Whole life typically makes sense for people over 80, since many of the problems people 80 and older are “permanent” problems such as final expenses and income replacement concerns.
The pros of whole life insurance are that you have guarantees in place which allow you to have the kind of peace of mind you want and your rates never go up.
How would you like to experience a rate increase in your advanced ages on your life insurance, if you are over the age of 80? You probably wouldn’t be too happy with that. Well, you don’t have to go through that if you purchase a whole life insurance plan.
The second pro is that the covers never cancel due to age health so you don’t have the risk of ever having to outlive coverage.
And a third pro is that you may qualify for coverage that starts from the first day even if you’re over the age of 80.
Some people commonly think, “Only people who are in pristine shape over the age 80 could ever qualify for some kind of first day full coverage.”
I’m happy to report that this is not necessarily the case.
I’ve had many circumstances where people with not so great health were able to qualify for first-day full coverage.
Life Insurance For An 84-Year Old
Take for example Mr. Francisco from Maryland. His son called me up and was looking for a life insurance policy to take care of final expenses for his dad.
Mr. Francisco was 84 years old at the time when he inquired. He was a little worried that he may have to go through what’s called a two year waiting period because he found out that he had Parkinson’s disease.
I was enthralled to tell him that he was eligible to qualify for first-day full coverage through one of the carriers and I have!
I can’t tell you 100 percent sure that could qualify for first-day full coverage. But I can tell you that there is likely if you work with an insurance broker like me, that you will have a better chance.
Over 80 Whole Life Insurance & Burial Insurance: Disadvantages
The biggest drawback with whole life insurance is that there is the potential that you may only get a two-year waiting policy.
Sometimes, due to people’s health, all they can qualify for is a plan that will cover accidental death only the first two years and then full coverage.
A lot of people over the age of 80 looks for life insurance because they run out of options by the time they call us.
I’m not saying this is necessarily going to be your case. You should check anyway, it’s worth it! It is likely that you may be facing debt if your parent’s health or your own health is deteriorating, and you want to take care of things.
Universal Life Insurance for Over 80
Universal life insurance coverage allows for the option of temporary or permanent life insurance coverage.
One of the pros of these plans is that you may get more coverage per dollar of premium payments than what you could find with a whole life type of plan.
If you’re looking for additional coverage and a whole life insurance plan seems too expensive, it’s worth looking at a universal life and to see if it’s a better option.
The biggest drawback with universal life plans is that there is much more strict underwriting than with whole life insurance.
You’ll most likely have to take a medical exam. Many times you will get rated up or possibly declined for coverage.
My recommendation is to talk to a broker to figure out if this is something that may qualify.
You may find that you do. However, it may be wise to try to qualify for universal life plan along with simplified whole life, at least so that you can figure out if one of these two will take it off.
Over 80 No Medical Exam
Should you take an exam?
This is a question a lot of people ask about getting life insurance on somebody over the age of 80.
Examinations are sometimes optional and sometimes required. It largely comes down to the type of product that it is that you are selling.
So, let’s talk about what you can expect based on the two types of products that we discussed in this article.
Whole Life Insurance Exam for Seniors
It’s very unlikely that you’ll have to do an examination with all life insurance as long as you do what’s called a simplified issue whole life product.
All of my clients I’ve referred to earlier have their coverage with simplified issue whole life insurance products. These generally do not rely on examinations to come up with health determinations.
Many times all that they do is just simply look at your health history records and usually give you an answer, either instantly or within the next several days.
This is great because it can save you the time and the headache of trying to get scheduled for examinations, blood analysis, extensive exhaustive examinations and it’s a much higher chance of getting approved for the coverage you’re applying for.
Exams With Universal Life Insurance for Seniors
If you do a universal life plan, more likely than not, you may be approached to do some sort of examination. Examinations typically involve blood withdrawal and a full questionnaire done by your doctor. It can be a real hassle.
Which is why I really only recommend this course of action if you are extremely healthy and if your broker feels like you are well enough to pass it.
Bottom Line for Over 80 Looking for Life Insurance
Life insurance for seniors over age 80 is absolutely doable.
The best company or product will depend on your health situation. Just make sure you’re working with an agent or agency that has the knowledge and products to find the best rates available for your situation.