Typically speaking, life insurance is a young person’s game. When you’re healthy and fit, it’s easy to get approved for low premiums and high coverage. Once you reach your golden years, however, it can be quite tough to find a policy.
But it’s not impossible. Today, we want to focus on getting burial insurance for seniors over 70. Just because you won’t qualify for preferred rates or top-tier coverage doesn’t mean you can’t provide for your loved ones. Here is everything you need to know about getting a policy at this age.
What is Burial Insurance?
Another term for this coverage is end-of-life insurance because it’s designed to help cover the costs of things like burials and funerals. Because of this, these policies don’t offer as much of a death benefit as regular life insurance. In most cases, you can only expect to get up to $25,000.
Fortunately, for seniors over 70, this kind of coverage should be sufficient for their needs. Since burials can cost thousands of dollars, providing extra money to your loved ones can alleviate their financial burden and provide peace of mind.
Advantages and Disadvantages of Burial Insurance
As with all kinds of life insurance, there are benefits and downsides. Because burial insurance is relatively limited, it’s easy to weigh the pros and cons before making a final decision. Here is what you should pay attention to when picking out a policy.
Pro – No Medical Exam Necessary
Usually, when applying for life insurance, you’ll have to provide detailed medical records and possibly go through a paramedical exam. With burial insurance, however, you can often avoid all of that. Instead, the insurer will simply want to know your age and whether you have any significant health issues, like diabetes or cancer.
Con – Limited Death Benefit
If you want to provide a substantial inheritance for your loved ones, burial insurance will not be a viable solution. That being said, any excess funds that don’t go to your end-of-life expenses can be kept by the beneficiary. So, if your funeral only costs $15,000 and you have a $25,000 policy, the remaining $10,000 can be spent in any way.
Pro – You May Be Able to Avoid the Two-Year Waiting Period
As we’ll discuss in the next section, you might qualify for level benefits with burial insurance. This means that your loved ones will receive the full death benefit if you pass, even if that happens within the next two years. So, if you’re worried about the future, burial insurance can offer additional peace of mind.
Con – Premiums Are Higher
When compared to standard term insurance rates, burial insurance can be much more expensive. The older you are past 70, the higher your premiums will be, so you want to get a policy as soon as possible. Also, depending on the type of payment plan you qualify for, you may be paying a lot more than you’d realize.
Pro – You Don’t Have to Pay Forever
One advantage of having a smaller death benefit is that it’s possible to pay it off before you die. For example, let’s say that you get a policy for $15,000. After a few years, you may pay that much in premiums, meaning that you don’t have to continue making payments afterward. At that point, the coverage is guaranteed, no matter what happens.
Pro – You May Be Able to Add Insurance Riders
While burial insurance is designed to cover end-of-life expenses, you can also add a few riders to make it more comprehensive. Examples of insurance riders include accidental death and dismemberment (AD&D) and living benefits.
The latter option means that you can receive funds while you’re still alive to help pay medical bills. You do have to meet certain qualifications, though, and each insurer is different, so keep that in mind.
Payment Options for Burial Insurance
When setting up your premiums, you’ll want to get the best benefits possible. There are three tiers available – level, modified and graded. Here is a brief overview of each one.
If you’re in good health and you don’t have any significant medical issues on your record, you should qualify for level benefits. In this case, your beneficiaries can receive the full amount when you pass, no matter how soon that may happen. While you don’t necessarily want the policy to pay out shortly after you get it, level benefits do provide some added peace of mind.
On the other end of the spectrum, we have modified benefits, also known as guaranteed acceptance life insurance. Because this policy is open to everyone (including those with substantial health problems), the premiums are exceedingly high.
In most cases, you could wind up paying hundreds of dollars per month. Unless you have mitigating circumstances (i.e., a terminal illness), you’ll want to avoid modified benefits altogether if possible.
Another reason to hold off on guaranteed acceptance insurance is the two-year waiting period. If the worst does happen within that time, your beneficiaries will only receive the money you’ve paid in, plus an additional 10 percent. Once the two years are finished, however, they will get the full death benefit.
In between level and modified benefits is the graded option. In this tier, the death benefit is graded based on how much time has passed. Again, there is a two-year window, but your loved ones will get more money with this policy.
Typically speaking, graded benefits will pay out 40 percent in the first year, 75 percent within the second year, and 100 percent after that. This tier is ideal for anyone with a history of health problems but is otherwise in good condition right now. If you don’t qualify for level benefits, this is the next best thing.
Why Do You Need Life Insurance?
Before talking with an insurance agent about getting a burial insurance policy, it’s crucial to determine whether one is necessary at all. Once you reach 70, your circumstances have likely changed significantly, which might negate the need for any form of life insurance.
Before making a final decision, consider these factors.
How Much Will Your Funeral Be?
On average, a funeral costs around $7,000 to $12,000 in the United States. The most common elements your loved ones will have to pay for include:
- Casket or Cremation
- Body Transportation to the Funeral Home
- Memorial Service
- Burial Plot
- Embalming (for Open Casket Funerals)
- Death Certificate Fees
When figuring out whether burial insurance is right for you, be sure to calculate the various expenses that you’ll incur when you pass. Also, keep in mind that these costs can go up over time, so you might want to add a buffer to be safe. For example, if your total today is $7,000, you may get a policy with an $8,000 or $9,000 death benefit.
Do You or a Spouse Currently Have Life Insurance?
In many states, a spouse has to be named as the primary beneficiary of a life insurance policy. If you and or your partner already have insurance, then there is no need to add burial coverage as well.
That being said, if only one of you has a policy, then it can be a good idea to cover the other person, just in case. For example, if one spouse has an $80,000 policy and the other doesn’t, getting burial insurance for him or her can offer financial protection for both of you. That way, if the uninsured person dies first, the survivor can cover burial expenses.
Will Your Nest Egg Cover Funeral Costs?
Ideally, you’ll have a substantial retirement fund for your golden years. Now that you’re 70 years old, you get to enjoy that money.
If something were to happen in the next few years, though, would you need burial insurance to cover your funeral or burial? If so, then it may be unnecessary to pay monthly premiums.
On the flip side of things, it’s always better to get life insurance sooner rather than later. Right now, your financial situation may be looking good, but not so much in 10 years.
However, trying to get a policy at 80 years old can be even more challenging. Be sure to run a few scenarios before making a final decision.
Have You Talked to Your Beneficiaries?
For many people, the idea of talking about life insurance can be too off-putting. It’s never a pleasant conversation to discuss you or a loved one’s death, but it’s a necessary part of planning. If your beneficiaries don’t know that you have a policy, they can have trouble claiming the money.
Another thing to consider is having more than one beneficiary. Once you pass, the insurance company will try to contact the first person listed. If he or she is unresponsive, then the insurer will move onto any additional beneficiaries. Naming more than one person can ensure that someone receives the money and can use it to cover your funeral costs.
Finally, talking with your loved ones is crucial for ensuring that your wishes are met. For example, if you want most of the money to serve as an inheritance, your beneficiary needs to know that. Otherwise, he or she may use it all for your funeral and memorial service since it might feel wrong to pocket the remaining balance.
Will You Have Outstanding Debts?
Although burial insurance is typically designed for end-of-life expenses, it can be used for anything. For example, if you still owe money on your property or you have any debts that can be passed onto a spouse, this insurance can provide financial stability for your loved ones.
As a rule, the only debt that will pass onto family is debt shared by a spouse (i.e., a joint credit card). However, if you have a mortgage payment and your beneficiaries want to keep the house, they will have to assume ownership and continue paying it off. In that case, a higher death benefit can help ease that transition.
Another thing to understand about debt is that it can eat away at your estate after you pass. For example, if you owe $30,000, that money can come out of probate, unless you put your funds into a trust. So, if you only have $30,000 or less to give as an inheritance, that can all be wiped out.
If you’re worried about this problem, be sure to talk to a lawyer about options. In some cases, burial insurance can be an excellent way to get around this issue, but it’s not the only one.
Can I Get Term or Whole Life Insurance at 70?
While burial insurance does offer some benefits, it’s not as favorable as other types of life insurance. Fortunately, your age won’t prevent you from getting coverage, as long as you find the right company. Also, keep in mind that you do have to be in excellent health, so if you’re not, then burial insurance may be the only option available.
Here is a quick breakdown of what you can expect from whole and term life insurance at 70 and older.
- Term Life Insurance – most insurers will cap your term at 10 years because of your age. At first, the premiums will be relatively low, but they go up every year until the term ends. Because of this, it might not be a good option.
- Whole Life Insurance – the primary benefit of this policy is that it can build cash value, which can be passed onto your loved ones. For whole life insurance at 70, you also have to be in excellent health. As with term rates, however, your costs will go up as you age, so it can become prohibitively expensive for the long-term.
- Guaranteed Universal Life Insurance (GUL) – realistically, this is the best option outside of burial insurance. This policy works similarly to term insurance, except you’re guaranteed coverage until a certain age, rather than a set number of years. Best of all, your premiums are locked in so they don’t increase.
Contact NextGen Life Insurance Today
Getting burial insurance for seniors over 70 is not impossible, but it can be overwhelming. Let NextGen Life Insurance help you compare rates and find the right plan for you and your loved ones. Peace of mind is just a click or call away.