As we get older, we begin to focus on different priorities. By the time we round the corner to age 90, we are probably thinking about enjoying our time left with our loved ones, staying as healthy as possible, and getting all of our affairs in order.
Part of that, of course, is thinking about how our family will pay for our final expenses after we pass away.
While life insurance is no longer needed to provide for small children or to replace your income for a spouse, it can still be a worthwhile financial product to purchase. In fact, by age 90, buying life insurance to cover your funeral and other final expenses can be a wise decision.
Let’s take a look at what buying life insurance looks like once you reach your nineties, and what you can expect from the policy.
Life Changes Around Age 90
The average life expectancy for Americans is 78.8 years, according to the CDC. Living beyond that, especially to age 90, is a wonderful feat.
Of course, reaching this age also brings with it many realizations. None of us will live forever, and the older we get, the closer we inch to our final days. This makes planning for our final expenses even more important.
The older we get – especially by age 90 – the less likely we are to have others depending on us for physical or financial support. Our children (and grandchildren, and great-grandchildren...) are long since grown, supporting themselves and their own families. Any living spouses are living off of the same retirement funds, investments, or government benefits that we are, eliminating the need for the income-replacing life insurance policies of our younger years.
By this age, you are also unlikely to have financial concerns outside of your final expenses. Your mortgage was probably paid off long ago, you’re unlikely to still be paying off an auto loan (if you even still drive), and it’s doubtful that you have high personal debts that would eat into your estate.
Put all of this together, and it means that you have fewer financial needs and considerations to keep in mind when calculating your life insurance needs. However, just because your finances are more secure and you don’t have dependents relying on you any longer, it doesn’t mean that buying life insurance at 90 can’t still be smart.
Why to Buy Coverage at 90
There is one primary reason that you may be considering a life insurance policy at age 90: to cover your final expenses and avoid leaving your loved ones with a funeral bill.
The average funeral costs about $8,500, which your family may or may not be able to cover without feeling the financial impact. And even if your estate would cover the bill, buying a life insurance policy strictly with your final expenses in mind ensures that your loved ones have exactly what they need, when they need it.
By the time you reach age 90, you will have trouble finding a “typical” life insurance policy. Most of the plans available to you will be modest in size, making them perfect for leaving behind just enough that your family can pay for your funeral, have money for a handful of added expenses, and maybe leave a bit behind for the grandkids. These won’t be the wealth-establishing, hundreds-of-thousands-of-dollars policies that you were offered when you were much younger, but at this age, that’s no longer the purpose.
What to Buy
You’ll be hard-pressed to find a term life insurance policy once you round the corner into your nineties. In your younger years, this “term versus whole life” dynamic was the exact opposite: term life was the affordable, flexible option while whole life was an expensive investment product that required much thought. As you get older and reach your final years, though, whole life becomes the product of choice, and necessity.
By default, whole life insurance policies tend to have easier, more forgiving underwriting processes. In fact, you can even find what are called “guaranteed acceptance” whole life policies, where a medical exam isn’t necessary to start coverage. This is a wonderful option to have if you aren’t in the best of health or are having new concerns.
These whole life policies, intended for older adults, are sometimes referred to as burial (or funeral) insurance coverage. As mentioned before, they are offered in very modest amounts – often, between $5,000 and $25,000 in coverage – which is often sufficient to cover final expenses and any other small bills that may arise.
It’s important to keep in mind that some of these policies, especially those without a medical exam, will have a graded benefit. This means that your coverage kicks in over time, and your beneficiaries actually won’t receive the full benefits of your policy right away.
For instance, if you were to pass away within the first year of buying the policy, your beneficiaries could be limited to receiving only the premiums paid plus interest. If you were to pass away in year two, they might receive a portion of the death benefit (for some companies, this is 50%). However, if you were to pass away in year three or beyond, they would receive the entire policy benefit.
Be sure to read the fine print on your insurance policy so that you know what your loved ones can expect.
What the Search is Like
Buying life insurance at 90 is much different than it was at 30, 50, or even 70. You are very limited at this age, and you’re likely to find only small whole life policies with the intent of being “burial insurance” coverage.
As mentioned above, these policies are usually around $5,000-$15,000 in coverage. You’ll occasionally find coverage up to $25,000 or even $50,000, but this is very rare. That’s because these policies are meant to largely cover funeral expenses and nothing more.
As we also touched on, there are often options for no-medical-exam policies. These guaranteed acceptance plans offer coverage regardless of medical history or current condition, though these can (and usually do) still factor into your premiums. And, of course, your age will also play a role in raising premiums.
The application process is easier for whole life/burial insurance policies once you reach your nineties. Obtaining a policy is fairly straightforward, in fact, once you find an insurance company willing to offer you coverage at your age.
You’ll need to submit an application and choose the coverage options that best suit your needs. Once you’re given a quote, the underwriting process can begin. If choosing the aforementioned guaranteed acceptance option, you won’t have to worry about a medical exam, EKG, blood work, or any of the other clinical tests required in your younger years (especially for term coverage).
You will still need to fill out questions about your health and history during the application process. You will likely be asked to confirm your questionnaire answers throughout the process, and the insurance company will probably request your last few years’ worth of medical records and prescription history.
All of this will go into determining the exact premiums you’ll pay for coverage.
Should You Buy Life Insurance at 90?
Deciding whether or not to buy life insurance at age 90 is personal to you and your needs. Since coverage at this age is mostly utilized for final expenses, it’s up to you to decide whether you need it.
If you have large savings or have already pre-paid for your funeral expenses, for instance, coverage may not be necessary. However, if you want to ensure that your loved ones aren’t left footing the bill for a funeral or other small expenses, life insurance could still be a wise decision.
While you’re much more limited in your choices at this age, there are still options available to you. If you want to talk over these options with a licensed life insurance agent, give us a call. We would be more than happy to walk you through the types of coverage offered (at 90 or at any age) and help you decide exactly what best suits you.