The perfect time to buy life insurance differs from person to person.
Varying factors such as age, medical status, financial standing, and how many people depend on you for financial needs contribute to the decision of buying life insurance.
As a senior, those factors tend to make buying life insurance over 75 more complicated.
Here are the details that’ll make the decision easier for you.
4 Best Life Insurance For Seniors Over 75 At A Glance
Before going ahead, let’s have a quick view of the available options at this age.
- Whole Life Insurance – Best Choice
- Term Life Insurance – Cheapest Option
- Final Expense Insurance – Covers Only Final Expenses
- Guaranteed Universal Life Insurance – Most Flexible
Why Do You Need Life Insurance Over 75?
There are a few arguments to consider when contemplating why you need life insurance later in life.
For someone over the age of 75, you might have expected to have all of your debts paid off by the time you reach your retirement years.
However, due to the shape of the economy in the last couple of decades, you found out that there are still some debts left unpaid.
According to a lot of studies, more and more seniors past the age of 75 are still paying off debts. Student loans, mortgages, or even credit card debts still have a hold on the seniors of our day.
Experts have figured out a few reasons why seniors are still paying off debts today.
According to a document published by the Consumer Financial Protection Bureau, more and more older Americans carry student loan debt than ever. The document was published back in 2017, and the situation has only gotten worse since.
Not only are these seniors carrying student loans, but they are also late on their payments. It’s also mentioned in the document that the majority of these people are paying off student loans for their children’s education.
From 2005 to 2017, the number of older student loan borrowers quadrupled. To make matters worse, a lot of the older borrowers had their Social Security benefits offset to better handle student loan debt.
Student loans cause a lot of financial distress for seniors of our age. What should be a peaceful retirement is instead a worrying experience.
For people with limited income, paying off student loans takes a huge chunk out of their savings.
Medical debt is a major cause of personal bankruptcies in the United States. Hospital stays, medical bills, and prescription drugs are all considered factors for medical debt. Medical debt affects every average American in every age group.
For seniors, including people over the age of 75, however, it only gets worse. For one, seniors over 75 aren’t as healthy as they used to be. They are a lot more prone to diseases. Their risk of living with an expensive illness grows with each year.
Aside from medical bills, doctor bills, and drugs, a lot of seniors also have to have a healthcare professional to assist them. And that isn’t cheap. Add to this pile of headaches the fact that healthcare prices get more expensive at a steady rate.
Just to get an idea of how financially damaging healthcare costs are today, here are a few examples of how much age-related diseases cost.
On average, dementia care cost over five years was $287,038, according to a 2015 study. That’s very close to $4800 each month. Dementia remains the most expensive disease to live with within five years.
Compared to cancer, which on average costs $173,383 in five years, you can see how expensive dementia is.
Various insurance plans have stipulations on dementia care. For instance, dementia care covered by Medicare (government-sponsored health insurance) would include the following:
- Cognitive assessments (including psychiatric evaluation)
- Care planning assistance (nursing care or caregiver assistance)
- In-home medical care (generally prescribed by a doctor)
- Skilled nursing care (patients requiring hours of medical attention)
- Hospice care (up to six months or near the end of life)
Private insurance policies include life insurance, employer-provided plans, and long-term care insurance. Different insurance plans cover various aspects of dementia care.
Therefore, it’s crucial to review the policy for the details. There are stipulations you need to take note of in long-term care insurance. Read the fine print to determine if the insurance company doesn’t cover the cost of long-term dementia care.
Memory care and in-home care offer support for the elderly with dementia. On average, dementia care cost over US$5000 to US$5250 in a memory facility.
Meanwhile, in-home dementia care for seniors who only need minimal supervision is usually less than memory facility fees. Seniors who need constant assistance with day-to-day activities and mobility may likely need all-inclusive memory care.
Alzheimer’s Association says that Alzheimer’s cost $341,000 on average from diagnosis to death. And most of the time, the families of the afflicted pay 70% of that amount out of pocket. Alzheimer’s the most common form of dementia.
Seniors over 75 years old are at risk of developing dementia. According to a study by the University of California Irvine, the chances of developing dementia increase in the ages 65 to 85.
Once you reach the age of 75 to 79, your chances of developing the disease increases by 17 percent. That percentage rises to more than 20 once you reach 80 and 32 percent at age 85.
Read this to learn how to get life insurance with this disease.
According to the American Diabetes Association, people diagnosed with diabetes spend $16,752 each year on medical expenditures.
While that value isn’t as high as those living with dementia, it is still a cause of worry for seniors over 75 who have limited sources of income.
While there is no definitive evidence that old age causes diabetes, a person’s age increases the chances of developing the disease.
Yes, there are people developing diabetes even as early as 14 years old. But one of the biggest factors that can lead to developing type 2 diabetes is being more than 45 years old.
Other common factors include high blood pressure and a history of heart disease, both of which are common among seniors over 75 years old.
Don’t worry, diabetes can’t hold you back from getting life insurance.
Heart disease is another common medical condition among seniors. Some estimates say that it costs $175,136 on average in five years.
“Adults age 65 and older are more likely than younger people to suffer from any form of cardiovascular disease, which is problems with the heart, blood vessels, or both,” says the National Institute of Aging (NIA).
The longer you live, the more prone you are to heart problems. There’s no getting around that fact. And you’d better be prepared for it financially.
In 2017, the average medical cost of Parkinson’s disease is $24,439 a year. Again, that’s a lot of money. And the older you get, the more likely you are of spending that much money a year.
These diseases, dementia, diabetes, cancer, heart disease, and Parkinson’s disease, are just a few examples of expensive age-related diseases. Seniors over 75 are more prone to these diseases than other age groups.
Aging is the largest risk factor for both the development and progression of Parkinson’s disease, according to a piece published in the Oxford Academic, published by John V. Hindle.
Medical expenses are one of the reasons why a lot of seniors over 75 are still paying off debts today. It’s one reason why you need life insurance.
Leaving an Inheritance for Your Children
Aside from paying off debts, another argument why you need life insurance even past the age of 75 is so you can leave an inheritance to your children.
Since there’s a trend of healthcare costs rising, you can’t be sure that what you have saved will be enough for you.
Therefore, you can’t be sure that you’ll leave an inheritance as large as you might have planned for your children.
One of the surest ways to leave an inheritance to your family is through life insurance. With life insurance, your beneficiaries will receive the money tax-free.
No matter what the economic situation is or how the stock market has fluctuated since you’ve signed the contract with the insurance carrier, your beneficiaries will receive the amount you agreed on.
Paying for Final Expenses
Final expenses, which include funeral costs and medical bills, cost a fortune. They are not cheap. And they should be carefully planned to avoid too much distress on the part of your family.
Just to get an estimate of how much average funeral costs, here are some prices you’d have to consider:
- An average casket costs just above $2000. However, caskets made of mahogany, bronze, or other special materials can easily reach $10,000 in price.
- A headstone, or grave marker, costs somewhere from $1000 to $3000 and can be more depending on its design.
- The ceremony easily reaches $1000. However, some estimates say it can cost as much as $5000.
- Embalming costs around $500 to $700. It should not cost as much as a grand.
These samples don’t include the burial itself or the cremation. Although prices for those depending on the funeral home, cemetery, or crematorium, there’s no doubt that they’re expensive.
The average cost of a funeral with cremation is $6000 to $7000. Note that, you can also get cremation insurance to cover all these expenses.
The average cost of a funeral, with flowers and caskets, can easily go beyond $9000 (this only includes the most basic expenses). And that price can easily rise depending on the materials used for the funeral.
Sure, the government is willing to financially assist the family of the deceased – they’re willing to give $255. But in the grand scale of things, that money won’t even make a dent in the cost of a funeral.
Funeral costs are just one possible final expense. Most of the time, medical costs are part of people’s final expenses, especially if you’re living with a disease that you need care for till the end of your life.
Diseases like diabetes, Alzheimer’s, Parkinson’s, and heart disease are there to stay. And these diseases can cause a debt pileup as was already discussed above.
Life Expectancy is Growing
As a 75-year-old male, you have a life expectancy of around 11 more years. For women, it’s almost 13 years. But when men reach 77 years old, their life expectancy goes to 10 more years and about 12 more for women.
So, the older you get, the higher your chances are of reaching an older age.
This may not seem like much bad news, generally. But money-wise, a longer life expectancy is a problem. Why? Because you’d have to spend a lot more as you age.
We’ve discussed debts. It’s likely that as you age, you have a higher chance of paying off student debts and mortgage debts – if you’re still paying off those.
However, the older you are, the more you are at risk of developing age-related diseases. And the more at risk you are of these expensive diseases, the more in danger you are of acquiring tons of medical debt.
And if you still want to leave your family a sizable inheritance, that’ll only get harder as your savings get swallowed up by medical bills and prescription drugs. Add to that the fact that healthcare costs rise with each passing year.
This is a trend that has been going on for decades, according to the Journal of the American Medical Association. And there doesn’t seem to be a visible end to it in the future. Healthcare costs are only expected to keep rising.
Can you see how this trend will affect your savings in the long run? You are expected to live a longer life than you might have anticipated. But medical costs are expected to get more expensive the longer you live.
And what’s quite ironic is that one of the reasons why healthcare costs rise is the fact that people are expected to live longer. It’s a catch-22!
Aside from medical costs, another cause for worry is the trend of rising funeral costs. So the longer you live, the more costly final expenses will be. All of these factors work towards one thing: destroying your financial status.
But the real harm will not be on you. It will be on your family.
Smoother Transition for Your Family Upon Your Death
The death of a family member is a traumatic experience. Emotional grief is one thing to handle, but what if the deceased left the family with a huge amount of debt? That makes the experience a lot more distressing.
Do you want to leave your family with student loan debt, medical debt, and leave them with nothing to pay for the funeral? Instead of an inheritance, they can be happy about, do you really want to leave your family with more problems?
Surely, you don’t want that. And that is why you need a reliable life insurance policy. A life insurance policy that will cover you and your family financially in potentially an unstable economy.
Advantages of Having a Life Insurance Over 75
A life insurance policy can give you peace of mind. Knowing that your family will not have to struggle money-wise after you’ve passed away offers relief.
The biggest benefit of having life insurance coverage is the fact that your family will have a financial cushion upon your death. The proceeds can even be used to cover funeral expenses and even pay off hospital charges or medical-related fees (if any).
But if you break down the variables of a life insurance policy, it’s evident that it becomes easier to plan your family’s financial future.
Premiums’ Changes Over Time is Expected and Calculable
Once you sign a contract with an insurance carrier, you pay your premiums regularly. If you happen to choose a whole life insurance policy, then your premiums might get higher each year. However, the rise in premium is calculable.
This is a big advantage when planning your family’s financial future. Knowing exactly how much you’re gonna have to pay regularly for the coming years gives you an idea of whether it will cripple you financially.
The biggest factor in determining the insurance rates is age. Carriers use actuarial tables to estimate the costs of insuring you. The older you get, the higher your mortality risk rises.
Each year, there is a bigger drain on the cash value of the policy. Depending on the carrier, you can know by what percentage your premiums will rise each year.
For a term life policy, your premiums are set for the entire duration of the term. It will not change. The stock market or the economy can’t do anything much to change that. Again, this is a huge benefit when planning your family’s financial future.
Knowing exactly how much you’re gonna have to pay each year makes it easier to know whether you have enough income to cover that cost.
Death Benefit Remains the Same No Matter What
Another benefit of having a life insurance policy is that the death benefit will remain the same no matter what. It will not change. The coverage you agreed to at the start of the policy is the coverage your beneficiaries will receive.
The government will not tax the life insurance proceeds. There are instances when both the federal and state taxes can affect a life insurance payout, but these only happen in special circumstances.
If your life insurance policy is a component of a large estate, for example, then state and federal taxes have a hold on it.
Just to be sure, however, it’s best to talk to a financial professional to be fully informed.
Total Cash Value Builds Up Over Time
In case you need an emergency source of money, there’s the cash value of your life insurance policy.
Cash value is the investment part of a life insurance policy. It is the portion of the policy that earns interest. You can withdraw or borrow your policy’s cash value in case of an emergency.
However, not all types of life insurance policies have a cash value feature. The following types may have the feature, depending on the carrier.
- Whole life insurance
- Universal life insurance
- Indexed universal life insurance
- Variable universal life insurance
Cash value works this way. Every time you pay your premiums, a portion of that goes into getting your life insured.
The other portion goes toward building up your cash value. The cash value often accumulates tax-deferred interest.
How much interest your cash value earns depends on the type of life insurance you choose to buy.
There are four major ways to access the cash value of your life insurance policy.
Withdrawing Cash Value
Tax-free withdrawals can be made from your policy. However, if you withdraw more than the amount in the cash value portion of your policy, it will be considered income and will be taxed.
Keep in mind also that withdrawing your cash value funds decreases the face value of the policy. It reduces the death benefit your family will receive if you pass away.
You can borrow the money in the cash value portion of your life insurance policy, along with the interest it has earned. The loan isn’t considered income, therefore, it can’t be taxed.
But if you die before paying the loan, it will be subtracted from the death benefit your family receives. Also, keep in mind that the loan accrues interest which will also be deducted from the death benefit.
Using Cash Value to Pay Premiums
You can use the cash value of your policy to pay your premiums. Just be sure to consult with an agent to see how this feature works in your specific policy.
Just keep in mind that exhausting your cash value completely can cause a lapse in your policy. You may lose your coverage entirely.
In case you need extra cash for some unforeseen reason, you can be relieved by the fact that your life insurance policy accumulates cash for you.
Beneficiaries Can Use the Death Benefit Anyway They Want
When you pass away, the proceeds of your life insurance go to the beneficiaries in their preferred form (including cash). The payout is often paid in one lump sum. But the insured can choose a structure on how the benefit will be paid to the beneficiaries.
The insured may choose to have half the proceeds given to the beneficiaries immediately after death, then the other half after a year or so.
Also, some life insurance companies allow the beneficiaries to choose how they’re given the proceeds.
Some beneficiaries may choose to use the proceeds to open a retirement account or be paid in installments instead of one lump sum.
The death benefit is not subject to income tax. The beneficiary can use it for whatever they want. It can be used to buy a house, a car, for tuition, or to open a savings account.
It can also be used to pay a debt, or your funeral, if your funeral isn’t paid for yet.
Choosing the Perfect Life Insurance For Over 75 – How to Do It?
What are the steps you should take to make sure you buy the perfect life insurance policy for you? A policy that you will not regret buying in the long run?
First, decide whether you really need life insurance or not.
Above, we’ve enumerated a lot of reasons why you might need life insurance.
Unpaid debt, medical bills, paying for your final expenses, leaving an inheritance for your family, and just making sure that your family will have a stable financial future after you’re gone – all of these are reasons enough to buy life insurance.
If any of these things apply to you, then you certainly need life insurance. You need a way to protect your family from financial harm after you’re gone.
Second, evaluate different types of life insurance.
You need to know all of your options. What’s the perfect life insurance policy for you.
Here are the types of life insurance over 75.
Whole Life Insurance
Whole life insurance, often called permanent life insurance, gives you coverage until you die as long as you pay your premiums.
Unlike term life insurance, this insurance doesn’t expire.
Term Life Insurance
Term life insurance is only in force for a set period. For a senior over 75 years old, you may only be able to get a ten-year term. Premiums are lower than in a whole life insurance policy. But if you outlive this policy, you’ll have to pay more to renew.
However, if you’re over the age of 75, you’d only get one shot at a term life insurance policy since most carriers only accept people 85 years old and below for qualification.
Seniors who are just over 70 years tend to be more suitable to buy this policy as after 10 years they can renew it. However, if you don’t want to renew the policy in the future, you can definitely go for it.
Final Expense Insurance
Final expense insurance, also called funeral or burial insurance, is nothing more than a small-scale whole life insurance policy with a name glorified for marketing reasons.
It’s affordable, and it’s easy to qualify for. There’s no medical examination needed, generally. You’d only have to answer a few questions about your health when applying.
Since the policy is designed to cover only the final expenses, burial or funeral, the coverage isn’t that high either. This is a popular choice among seniors, especially those on a tight budget.
This type of policy is an excellent choice and most affordable for seniors over 85, read this article.
Guaranteed Universal Life Insurance
Guaranteed universal life insurance is sometimes also called universal or adjustable life insurance. It is a more flexible version of the whole life insurance policy. You can reduce payments and sometimes even skip them.
However, the benefit is ultimately affected by your payments.
It’s fairly easy to qualify for this type of insurance. Even if you have a medical condition that disqualifies you to buy other life insurance types, you still have a chance of qualifying for a guaranteed life insurance policy that doesn’t require any medical exam.
How Much Coverage Do You Need?
The next step in buying a life insurance policy is determining how much coverage do you need. This depends from person to person.
A few factors to consider are:
- Your family’s financial situation
Using your income, can you pay your expenses? Do you have outstanding debts? How do you plan on paying your debts? At the rate at which you are paying your debts, how long before you have your debt fully paid?
You should buy a policy that covers you for as long as you have debt. Just in case you pass before the debt is fully paid.
What’s your family’s financial situation? Do your survivors need a lot of financial help after you’re gone? Or do you only need to worry about your final expenses?
All of these questions can help you determine how much coverage you’ll need.
How Much Are You Willing To Pay For Premiums?
The next item on the list is how much are you willing to pay for your preferred coverage? Study your finances well for this. Your and your family’s future is at stake. How much can you spare to pay for premiums?
Keep in mind that premiums for seniors over 75 years old are higher than those for younger people. And if you have a medical condition, you’re likelier to have to pay a higher rate.
It’s good to speak to a financial professional regarding these matters, just to keep yourself from making mistakes unknowingly.
Shop For All Available Options
The next step is to shop for all the available options. It is important to take your time with this. You don’t want to rush it and regret the decision later. Look for insurance companies that tick all your boxes.
First, look for all the insurance carriers that are available in your area. There are insurance companies that are not available in some states, so be mindful of that.
Then see which ones among these offer the type of life insurance policy you need. Then find out if you can qualify for that based on your age and health status.
Once you have the list of carriers that offer the type of life insurance you need and can qualify for, the next step is looking for the coverage you need.
The final step is examining the prices of all the carriers that fit your needs thus far. You have already pre-determined how much you’re willing to pay for the policy you want, so this step should be easier.
However, you might have to re-assess your finances if none of the options fit your needs.
Again, you should speak with a financial professional about these things. You don’t want to risk your family’s future.
Contact the Insurance Carrier
Now that you’ve chosen the perfect carrier with the perfect policy, it’s time to make contact.
It’s important to know how to get in touch with your preferred carrier. Keep in mind that some insurance companies only allow contact through an agent.
It’s also a good idea to talk to the agent first before signing a contract. An agent can help you get the best deal for your circumstances.
Sign The Contract
At this point, you should already be entirely sure of your choice. There are heavy consequences to signing a life insurance contract. There is no turning back because making a mistake will cost you who knows how many dollars.
So, review everything you have done up to this point. Make sure you did not overlook anything. And if you’re a hundred percent satisfied and confident in the decision, sign the contract.
Congratulations! You are now insured!
Best Life Insurance Providers for Seniors Over 75
Mutual of Omaha
Mutual of Omaha is the best option for seniors, hands down. It’s senior-friendly, and extremely reliable when it comes to customer service, which is something seniors over 75 can really use.
The carrier offers final expense, term, universal, and guaranteed advantage life insurance for seniors.
For term life insurance, seniors up to 80 years old can qualify. If you outlive this policy, you can renew yearly until you’re 94 years old. Coverage starts at $100,000.
For final expense insurance, applicants up to age 85 are accepted. Coverage ranges from $2000 to $25000. There’s no need for a full medical examination to begin coverage.
As for pricing, this carrier isn’t the cheapest, but not the most expensive either. Their prices are perfect for the good customer service they offer.
They offer good phone support as well as the option to meet with agents. They also have an easy-to-use website.
New York Life
New York Life offers whole, term, and universal life insurance to seniors. Their whole life policy can be purchased even if you’re already 90 years old or above.
The term life policy is available for purchase to only up to 75 years old. But you can convert it to permanent coverage without a medical exam.
Another reason why New York Life is a good option for seniors is the Living Benefits option, which covers chronic care and terminal illness.
North American Company for Life and Health Insurance
This is so far the best option for a universal life insurance policy. You can buy coverage up to the age of 85, for the lowest rates in the market.
Coverage can extend till you’re 120 years old, but you only have to pay premiums until you’re 100. So, if you live for an unexpectedly long time, you’ll save up a lot on premiums with this policy.
You also have the option of accelerating the death benefit if you need some emergency funds.
It’s Available, Life Insurance for Seniors Over 75
There are a lot of life insurance options for you, seniors over 75 years old. And there are a lot of benefits to being covered financially.
So, assess your finances. Study what type of insurance best suits your needs. Take your time shopping for options.