Purchasing life insurance in your 70s requires careful thought and financial consideration.
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When you're in your 70s, there are many items you may prefer to focus on besides finances and insurance types. But in today's unique economy, in which many seniors find themselves living on a limited budget of Social Security and retirement funds, the reality is that many would benefit from taking a broader approach to their financial health. And that may mean revisiting their insurance options, both for opportunities to cut costs and for other ways to boost their protections.
Life insurance is one such type worth looking closely at.
Despite a misconception that life insurance isn't worth it for seniors, especially those 70 and above, it can still be a smart and strategic tool when utilized appropriately. And it doesn't necessarily need to be cost-prohibitive, either. Still, every new premium you add into the mix each month needs to be assessed carefully, especially for older adults. So, should a 70-year-old actually buy life insurance or are they better served by avoiding it? Below, we'll analyze four things to think about that can better help answer this question.
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Should a 70-year-old buy life insurance?
The answer to this question will vary depending on multiple factors. Here are four items to consider that can better inform your next steps:
The price-coverage ratio
Life insurance doesn't need to be expensive, as those in their mid-60s can still qualify for six-figure protection with a premium under $100 each month, approximately. But the price needs to match the coverage needs. In other words, a $1 million life insurance policy purchased when you're 70 will be hard to attain and, if it is ultimately found, very expensive. Take the time, then, to evaluate the price-coverage ratio to better determine if the price you ultimately need to pay is worth the coverage you get in return. You may be surprised at both the price quotes you receive and the coverage options offered, especially if you act now.
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Delaying purchasing to later in life
On the other hand, life insurance isn't something you can delay for a later point in life, especially if you're 70 years old. Not only will this cause premiums to rise but it will limit your coverage options. Reduced coverage at a higher cost, then, should be avoided as much as possible. And, if you wait too long and your health worsens or you simply move into a less desirable age bracket (in the view of the insurance companies), you could risk being denied coverage altogether. Consider the ramifications of delaying a purchase to later in life carefully, then, as now may be the last, best time to act.
The financial needs you need a policy to address
If you already have savings in place for loved ones to pay for end-of-life expenses, a funeral, burial or more, then you may want to skip a life insurance plan and feel comfortable doing so. But what if you don't? Is that a financial burden you feel OK passing on to your children or family? By understanding the financial needs you need a policy to address, you won't only better determine what you're willing to spend and how much coverage you need, but you'll also more accurately determine which type of life insurance is most applicable.
The type of coverage that fits your goals
There are multiple types of life insurance to choose from with term and whole being two of the more prevalent ones. Term is typically cheaper but it ends after a select time (or term, hence the name). Whole life insurance lasts for the full life of the insured and has a cash component that can be utilized while alive but those advantages typically come in exchange for a higher premium. This is typically what "final expense" life insurance falls under as the death benefit associated with this type of whole life insurance policy can be used for funerals, burials, medical debts and more. But don't rush into any specific insurance type without first considering each closely as it's unlikely that each of these will adequately meet your goals (and budget).
The bottom line
So, should a 70-year-old buy life insurance? There are multiple advantages to doing so but those will be largely specific to the individual. There is no uniform answer. But by evaluating the cost-coverage ratio, considering the consequences of delaying a purchase to later in life, understanding the exact financial needs you need a policy to address and by evaluating the types of coverage best suited to fit your goals, you can make a better informed decision. Consider speaking with a financial advisor, then, or a representative from a life insurance company who can answer your questions and help you determine your next move.
Edited by Angelica Leicht
