Let’s not beat around the bush— buying life insurance for senior citizens can be pricey but there are a variety of options out there to help keep costs down. It is just plain math, according to the actuarial tables predicting our longevity: The older we get, the shorter our life expectancy is. And that is why life insurance carriers calculate the risk of mortality when they put a price on a policy, collecting a bigger chunk on premiums when you’re older because chances are they will have to pay out a death claim to the surviving beneficiaries sooner than later. That said… there are life insurance policy options for senior citizens (over age 55) offering different benefits, some more affordable than others. Age 55 is still a reasonable time to find an affordable term life policy if you’re in relatively good health. These straightforward products have lower premiums than permanent life policies, and you can choose a level term policy that is up to 20-years in length. Whether it’s covering up your final expenses or minimizing your estate taxes, whole life insurance is the best choice, though the premiums are significantly higher.
Guaranteed Universal Life (GUL) falls somewhere between the two — it’s cheaper than whole life but slightly more expensive than term life insurance. More about GUL later but first, here is a list of life insurance products for seniors from top-insurance carriers with high financial ratings:
Guaranteed Acceptance Life Insurance, also known as Guaranteed Issue or “GI” life insurance, might be just what seniors over age 55 are looking for if you want to skip the medical exam, and the health questions and get quick coverage approval. Guaranteed Acceptance is generally a whole life insurance policy with a limited death benefit. Following the same formula of other whole life policies, guaranteed acceptance life insurance policies will build cash value over time, for the coverage length desired, for as long as you pay the premiums. The death benefit to your heirs is typically restricted to less than $25000. Therefore, this is not something that is attractive, but there are other factors that you may find interesting.
Unlike fully underwritten life insurance policies where you must complete a medical exam or even simplified issue policies where a health questionnaire is required, these are excluded when applying for guaranteed acceptance life insurance. It is a simple process, with quotes based solely on your age, location, and gender. You can often get approved for instant coverage in minutes online. That’s the good news. The only downside to guaranteed acceptance whole life insurance is that rates are likely to be significantly higher than premiums for policies where you have to prove your health and insurability risk.
Guaranteed acceptance insurance is a pricey option but one worth considering because of its ease of approval for those who might not qualify for other policies, are a senior citizen or have chronic health conditions that would disqualify you from fully underwritten coverage. Guaranteed Issue life insurance might indeed be the only option out there for older applicants or those unable to qualify for other forms of life insurance.
A small step up the ladder for seniors would be simplified issue life insurance, which also excludes medical testing, and accepts a wider range of health problems than a fully underwritten policy. With Simplified Issue premiums will be lower. Additionally, there are term life insurance and universal life insurance policies available that offer the simplified issue option, which is cheaper than whole life insurance. The other caveat with guaranteed acceptance life insurance for seniors is that the limited coverage you can buy will probably cover only end-of-life or funeral expenses. For those seeking more significant coverage to pay off a mortgage, or pay for a child’s college expense, Guaranteed acceptance life insurance policy won’t provide a large enough death benefit. If you have any of the medical conditions below that may prevent you from qualifying for fully underwritten or simplified issue life insurance, guaranteed issue life insurance is the way to go.
You should also be aware that if you are elderly or have a severe health problem, guaranteed acceptance policies have a 2 to 3 year “waiting period” built in. If you die during this period from natural causes, your beneficiaries will not receive the full death benefit. They would only be entitled to the money you had paid in premiums, plus interest.
|AIG||Mutual of Omaha||New York Life|
|Waiting Period||2 years||2 years||2 years|
|Payout During Waiting Period||Premiums paid + 10% interest||Premiums paid + 20% interest||Premiums paid + 10% interest|
Health and age are a factor when it comes to what type of coverage seniors can get. Logically speaking, the older you get, the shorter the term policies available to you, and the more expensive the premiums are for any type of life insurance.
Medical underwriting is the main factor that determines your approval or rejection of a life insurance policy and also of what your premiums will be. After the age of 50, a 30-year term life policy from most carriers is off the table. By the time, you hit 70; your term length of coverage is cut down to roughly 10-years. Comparison-shopping for term life quotes is the first step in determining a ballpark price for coverage, depending on amount and coverage length. It is a no-obligation quote that gives you a starting point.
Is a decade enough time for you to carry life insurance? If you are older and have calculated that you will only need life insurance for another 10-years or so, buying a term policy that is convertible to a permanent policy is a strong option because you won’t have to take a medical exam when the policy expires. Many top-rated carriers offer this conversion option for slightly higher premiums.
There is no clear-cut answer for the best type of life insurance for seniors. The questions you should ask yourself are why you need life insurance in the first place, and what your financial and health situation is. If you’re 55 or older and looking for a new life insurance policy, you will have obstacles that younger people won’t. We talked about Guaranteed Universal (GUL) policy at the beginning and here is why it might be a feasible option for older people. GUL provides affordable coverage that is designed to last for your entire life, even up to 120 years of age, if you’re lucky to live that long. You can tack on a special rider to these Universal Life policies allowing early access to funds in the event of illness. The best thing to do is shop around by comparing quotes from top-rated providers to find the right fit for your budget.
So, if you are ready to see what all these types of life insurance policies will cost, you’ll need to start by comparing quotes from a list of providers you will find on our Smart System™. Seniors have a lot of different policy options to choose from, not just price. If you want to have a conversation to discuss some of these options, reach out to our experienced, and licensed agents, who are unbiased and can help guide you toward the choice that is right for you.
Thank you for reading our article, “Guaranteed Acceptance Life Insurance for Seniors – Best Life Insurance Over 55 “. If you have any questions, please leave a comment below.