Buying life insurance at age 80

By Steven Kobrin

Steven H. Kobrin, LUTCF


How's it possible that someone age 80 would still need life insurance? It may surprise you, but seniors of all ages utilize life insurance to meet their planning needs. For example, the need for family protection knows no age limit. And there are also age-specific needs, such as retirement planning and estate planning.

Family protection

A basic need for life insurance is family protection. Usually, this means that a parent will purchase life insurance in order to provide for dependent children. Once the children are out of the house and on their own, it is anticipated that the life insurance would no longer be needed. However, grandparents sometimes take on child-rearing responsibilities.

This could happen because their adult child is divorced, at which point he or she may need some financial assistance. In this case, life insurance could be used to protect their adult child and grandchildren against the loss of that assistance.

This could also happen if their grandchildren have suffered the loss of both parents, due to a tragic accident or other circumstances. Here, the grandparents could become the legal custodians, which would involve assuming all primary parenting responsibilities. In this case, life insurance could be used to provide the grandchildren with all the typical family protections, such as college funding.

Retirement planning

Another need for life insurance in the golden years involves "pension maximization stabilization."

When people retire, they are typically given a choice of pension distributions. They can take either:
    (1) a maximum monthly income for their own lifetime only, or

    (2) a smaller monthly amount over both their own lifetime and the lifetime of their spouse.
When the retiree selects the first choice, he also typically purchases a permanent life insurance product (such as universal life) on his own life, and names his spouse as beneficiary. This provides his spouse with an income in the event that he dies first.

Estate planning

An additional need for life insurance at age 80 involves estate planning.

After a long lifetime, people often feel strong ties to particular religious, political, and other community service institutions.

Life insurance is an ideal way to spend a comparatively small amount of money and yet provide a significant charitable gift to a favorite cause.

Some guidelines

Here are some guidelines to follow, once you or a family member reach the "golden years" and need to shop for life insurance.
    (1) Be sure to get prequalified. Life insurance companies specialize in the risks they underwrite. Some of these carriers have expertise in underwriting senior citizens and can therefore provide very competitive rates.

    (2) Make sure your broker will actively support you throughout the underwriting process. Additional underwriting requirements are often imposed, and the applicant needs to feel comfortable in complying with them.

    (3) Be sure to obtain professional tax and legal advice with regards to policy ownership and other estate issues.
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