What Type of Life Insurance Should You Buy for a Parent in Their Late 60s?

Answer: Start With the Reason for the Insurance

Before choosing an insurance company, determine what you want the life
insurance to accomplish.

If the primary goal is to provide money for funeral expenses and final bills,
the amount of insurance needed may be relatively modest.

If the goal is also to leave money to children or grandchildren, provide
liquidity for an estate, pay outstanding debts, or create an inheritance,
the appropriate coverage could be considerably larger.

A healthy nonsmoker in their late 60s may still have several life insurance
options available. That’s why it can be worthwhile to compare policies
before automatically purchasing something advertised specifically as
“senior life insurance.”

Is Final Expense Insurance the Best Choice?

Final expense insurance is generally a smaller permanent life insurance
policy designed to provide money for funeral costs and other expenses
following death.

These policies can be convenient because many use simplified underwriting,
which may involve health questions without a traditional medical exam.

But convenience does not always mean the lowest price.

Can Someone in Their Late 60s Still Buy Term Life Insurance?

In many cases, yes.

Depending on age, health and the insurance company, someone in their late
60s may still qualify for term life insurance.

Term insurance can provide a larger death benefit for a lower initial
premium than many permanent policies. However, there is an important
tradeoff:

Term life insurance eventually expires.

If someone purchases a 10-year term policy at age 68 and lives well beyond
that period, the original coverage may end. Continuing coverage at an older
age can become considerably more expensive.

Term insurance may therefore make sense when the financial need itself is
temporary. It may be less suitable when the primary objective is to make
sure money is available whenever death occurs.

What About Whole Life or Permanent Life Insurance?

Permanent life insurance is designed to potentially remain in force for the
insured’s lifetime as long as required premiums are paid and policy
conditions are satisfied.

That can make permanent coverage attractive when a family’s objective is:

Permanent coverage generally costs more than term insurance, but it can
remove the concern of outliving a specific term period.

There are several forms of permanent life insurance, so families should
compare guarantees, premiums, cash values and policy longevity rather than
choosing solely based on the words “whole life” or “permanent.”

Don’t Automatically Choose “No Medical Exam”

This is especially important for healthy seniors.

A no-medical-exam policy may sound easier, but insurance companies charge
based partly on the amount of information they have about an applicant’s
health.

Someone who is healthy, takes few medications and has never smoked could
potentially benefit from more complete underwriting.

Before purchasing coverage, compare both traditionally underwritten and
simplified-issue policies when available.

Questions to Ask Before Buying Senior Life Insurance

• Is the death benefit guaranteed?
• Are the premiums guaranteed not to increase?
• How long is the policy designed to remain in force?
• Does the policy require medical underwriting?
• Is there a waiting period before the full death benefit is available?
• Can the policy lapse if certain assumptions change?
• Does the policy accumulate cash value?
• What happens if premium payments stop?
• What are the insurance company’s financial-strength ratings?
• Can several insurance companies be compared?

What If a Home and a Trust Are Also Involved?

Life insurance and estate planning often overlap, but they should not be
treated as the same decision.

A trust can potentially own a life insurance policy or be named as its
beneficiary, but ownership and beneficiary arrangements can have important
legal and tax consequences.

Similarly, transferring a parent’s home into a trust should be discussed
with an estate-planning attorney who can review the family’s objectives and
circumstances.

An insurance professional can help evaluate coverage, while an attorney and
tax professional can advise on trust, estate and tax matters.

Who Should Own the Life Insurance Policy?

This is a question families sometimes overlook.

Depending on the circumstances, the insured, another individual, or a trust
could potentially own the policy. Ownership determines who controls the
policy, including certain rights regarding beneficiaries and policy values.

Before an application is completed, make sure everyone understands who will
own the policy, who will pay the premiums, and who will receive the death
benefit.

Why Applying While Healthy Can Matter

Age and health are major factors in life insurance underwriting.

A healthy person applying at 68 may have more choices than the same person
applying several years later after developing a significant medical
condition.

That does not mean you should rush into purchasing a policy. It means there
can be value in exploring your choices while health is still good.

The Bottom Line for Pennsylvania Families

There isn’t one life insurance policy that is automatically best for every
senior.

A family looking for $20,000 or $30,000 for final expenses has a very
different objective from a family looking for $100,000, $250,000 or more
for estate planning and inheritance purposes.

Instead of beginning with the question,
“Which insurance company should we use?”,
start by asking:

Life insurance availability, premiums, benefits and underwriting requirements
vary by insurance company, age, health, state and policy type. Guarantees are
based on the claims-paying ability of the issuing insurance company. This
information is for educational purposes and is not legal or tax advice.
Consumers should consult qualified legal or tax professionals regarding
trusts and estate-planning matters.