Senior Life Insurance: How to Care for Your Elderly Parents Life Insurance Needs

Parents are often reluctant to discuss their financial resources or plans with their children, but this is a conversation that needs to happen so that no one is surprised about monetary obligations and debts that are part of the estate.

As with life insurance at younger ages, there are several types of coverage affordable for seniors depending on their age and health.

  • Final Expense Insurance– The most common life insurance for seniors over 70 is also known as “final expense” coverage. Although these policies are a type of whole life insurance and do generate some cash value in the policy, you cannot remove funds without severely impacting the policy.  Without paying higher premiums including interest on the amount borrowed, the policy will lapse and the death benefit will no longer be in force.
    • These policies are typically written for smaller amounts of coverage, generally from $2,000 up to $40,000. They are known as “simplified issue” policies because they do not require a paramedic exam.  If all questions on the application can be answered “No” regarding health and lifestyle, the policy will be issued after the insurance company makes a check of the prescription database to make sure that no drugs are being prescribed which would conflict with any health question.
    • When comparing these types of coverage, the consumer should note the company’s ratings by AM Best and make sure to find a strong carrier, one that is rated A or A+.
    • Company rating have little to do with the premium cost, so it is possible to apply with a highly-rated insurer while at the same time obtaining a good price.
    • Many seniors prefer this type of coverage as it takes less time for approval and does not require an exam. All such policies are whole life with level premiums for the lifetime of the insured, or to age 100 in some cases if the insured lives past that age.
  • Graded Benefit Final Expense Insurance– What about seniors that cannot qualify for standard final expense coverage?
    • Most applications feature at least 2 sets of qualification questions. If any of your answers require a “yes”, then it still may be possible to get “graded” benefit coverage.
    • Although policies differ, in most cases the policy will act as an accidental death policy only for the first two years, and after the policy will pay for death from any reason. However, some graded benefit policies will pay a small percentage of the death benefit in year one, and an additional amount in year two followed by the full benefit in year three and beyond.
    • If you only qualify for a graded benefit policy, then look to those carriers that provide the best coverage in these circumstances.
  • Final Point on Final Expense Insurance– When comparing qualifications for immediate coverage, companies ask health questions in different ways. You may find that while one carrier will not accept you, another one will.
    • For example, we have found several applicants denied coverage with one carrier only to be accepted by another simply because of the way the question was asked.
    • If you only need one reason for using an independent life agent, this is it. Your agent will be able to guide you to the least expensive policy that you can qualify for and that meets your needs.
  • Guaranteed Issue Life Insurance– If you cannot qualify for either final expense or graded benefit policies and you are age 80 or younger, then “guaranteed issue” contracts are your best alternative.
    • These policies require no health information and as the name implies, your policy is guaranteed to be issued assuming that the carriers that write this insurance do so in your state of residence.
    • For the first two years these policies will act like an accidental death policy. After they will pay for any reason.
  • Universal Life Insurance– We’ve been talking about final expense policies, but what if the amount of coverage needed is greater than offered by the simplified issue policies?
    • In this case, you best choice will probably be a universal life policy which guarantees level premiums for your lifetime. While these policies require paramedic exams and medical records, your chances of acceptance may be greater if you have significant health issues.
  • Talk to an Independent Life Insurance Agent– As with any purchase of life insurance, your advocate is your agent.
    • All agents are paid by the insurance company regardless of policy type.
    • While the concept of life insurance is easy to understand, there are many factors which can make the use of an experienced independent agent a very smart decision.

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.


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