Finding affordable life insurance for elderly parents can sometimes be very difficult especially if your parents have health issues or take several types of medications. Fortunately, if you are looking to purchase life insurance policy for your parents, there are a growing number of insurance companies that specialize in insurance for the elderly.
Surprising Facts About The Elderly
Elderly people, also known as seniors, are comprised of people ages 65 to 85. Most seniors in their 60’s, are retired or they are about to retire. People in their 60’s find it easier to qualify for life insurance than many people over 70.
Elderly folks in their 70’s and 80’s have lived through 2 world wars, The Great Depression, several recessions and numerous military conflicts.
The Elderly are categorized into 4 different segments:
- Healthy Indulgers: People who feel accomplished and are financially comfortable. They “grab life by the horns.”
- Frail Recluses: Those who stay inside because of their failing health
- Healthy Hermits: They are physically sound but maintain a solitary lifestyle or stay home alone with a spouse or companion
- Ailing Outgoers: These people have health limitations but don’t let that stop them from living life
Most elderly people understand that a financial catastrophe can happen at any time. Some worry about outliving their savings or their entitlements, such as social security or Medicare. Others fear that hard times could be in their future and could create financial difficulties for not only themselves, but for their children.
Luckily, a life insurance policy can alleviate many of these financial concerns your parents might face and help you financially as well.
In this article we will cover:
- Why More Companies Are Specializing In Insurance For The Elderly
- Why Buy a Life Insurance Policy on your Parents?
- Can You Buy A policy on Your Parents?
- How Insurance Companies View Older People
- How To Buy A Life Insurance Policy On Your Parents the Right Way
- Tips for finding The Lowest Rates for people over age 65
Why Are Insurance Companies Specializing In Insurance For The Elderly?
According to the Administration On Aging (AOA), elderly parents- or seniors, numbered over 46 million people in 2014 (the latest year for which data is available).
Seniors represent 14.5% of the U.S. population. 1 out of every 7 people in American are over 65. By 2060, it is estimated there will be about 98 million elderly people. More than 2 times the number of elderly that are living today.
The fastest growing segment of adults are those over age 85. With advances in medical breakthroughs and new medications, people are living longer than ever. It’s very conceivable that a child born today in 2016 will live beyond the age of 100.
With the rapidly changing demographics of people living longer, insurance companies are trying to meet the financial needs of the growing elderly population.
Why Life Insurance For Elderly Parents?
There are a number of reasons why you might want to have life insurance for your elderly parents.
One of the primary reasons is to cover the cost of funeral and other final expenses. Today, the average funeral cost can be $10,000 to $20,000. When you consider the cost of the funeral home, coffin, burial plot, headstone, and a memorial service it all adds up very quickly. So, having a policy for final expenses can help with alleviate these expenses.
Another reason to have life insurance on parents is to make sure that any unpaid debts can be paid off. Because people are living longer, parents who are in their 60s, 70s, and older could very likely have a mortgage balance, auto loan(s), credit card debt or other financial obligations.
How Do I Determine The Amount Of Life Insurance?
Here are some tips that you should consider before you move forward:
First, you will want to determine the amount of coverage you will need.
For example, if you are buying life insurance for your parents in order to pay off specific debts, then you should add up the amount of the debt (or debts) to be paid off in order to come up with the policy’s face amount.
Second, You may be interested in a policy to cover your parent’s final expenses.
You may want to discuss this concept with them and find out what final arrangements they may want. When adding up these expenses, you may want to also think about additional coverage in the event your parents may have some uncovered medical bills or long term care costs. You could find yourself responsible for these expenses as well, so having some additional coverage can give you extra peace of mind.
Third, You parents may have an estate planning problem.
The value of their estate needs to be added up and a professional in these matters (Estate Planning Attorney) needs to calculate their future estate tax liability. Life insurance is a perfect solution and most efficient way to pay for a parent’s estate taxes. With a life insurance policy, you can avoid having to liquidate other assets such as real estate, stocks and other non-liquid investments.
Can I Buy Life Insurance On My Parents?
While there are several reasons to purchase coverage, you may be asking yourself, can I buy life insurance for my parents? The simple answer is yes!
But there are a few things to consider:
You will need to prove to the insurance company that you have insurable interest or that you will suffer some type of a financial loss in the event of your parents passing.
For example, if your parents have certain financial obligations that you would be responsible for, then this would prove you have an insurable interest.
You can buy the policy on your behalf of your parents and pay for the premium as well.
Your parents would be the insured and you, your siblings or another family member would be the beneficiary of the insurance proceeds.
Life Insurance Underwriting – How Insurance Companies View Older People
As we age, our bodies tend to break down or not work as well as when we were younger. Even the most fit people over age 65 have some type of health issue or they are taking medications to lower cholesterol, blood pressure and so on.
However, these health issues are less of a concern for life insurance underwriters than they are for younger applicants, especially if they’re well controlled and your parents see a doctor regularly.
On the other hand, if your parents have chronic health issues such as, dizziness, frequent falls, weakness, fatigue, low physical activity and recent hospitalizations, they may have trouble qualifying for life insurance. To an insurance underwriter, any of these health problems show an increased risk of mortality.
If this is the case, then a guaranteed issue policy such as a final expense policy on no exam life insurance, may be your only options. These policies do not require a medical exam, just an application but the coverage amounts will be lower, usually from $10,000 to $35,000
Advice For Finding The Lowest Rates For People Over 65
Don’t Go It Alone
There are companies that advertise on the Internet, radio and TV who tell people they can buy direct and cut out the middleman (the agent), saving you bundles of money. This is a load of horse pucky! Don’t believe the hype! Every state requires a licensed insurance agent to sell life insurance, Period.
Get several comparison quotes. DO NOT work with the agent who sold you your auto or homeowners insurance! In most cases, they are not specialized in life insurance. Work with an independent insurance agent – Like us – who can offer you quotes from more than one company. Also work with an agent who specializes in the insurance needs of the elderly. You should work with someone who understands your situation.
Be Upfront and Honest
Be honest about any health conditions you have or medications you are taking. An independent insurance agent works for you and is not beholden to any particular insurance company. He or she can shop several companies and find which ones will make an offer based on your lifestyle habits and health condition. Every life insurance company looks at your health history differently. Your agent is on your side to help you find the best policy at the best price.