This article will explain why someone in their mid-70s would want to purchase life insurance. Additionally, you will see sample rates and helpful, money-saving tips. Premium savings can be huge if you know the important steps to follow and pitfalls to avoid.
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Why Life Insurance in Your Mid-70s
If you want to skip the Why section, please go to the next heading.
Most people think life insurance should be purchased early in life. “Buy life insurance when you’re young, healthy and when loved ones are dependent on your income.” For the most part, that reasoning is sound.
The reality is that life has a way of throwing curveballs. Most of us think it would be great if we were so financially secure that our loved ones would be in great shape if we were to die. However, that’s often not the case. For numerous reasons, people in their 70s need and/or want to buy life insurance.
A few common reasons for someone age 75 to buy life insurance:
- Realize your spouse, children or grandchildren need financial assistance. Sometimes, you just want to help your loved ones.
- A smart, equitable, and tax efficient way to transfer wealth. Depending on your financial situation. This could be a very smart move to avoid paying estate taxes or other reasons. It’s easy to divide life insurance proceeds equally to your children or grandchildren.
- Final Expenses (funeral and related costs). This is self-explanatory. You might simply want to earmark a policy for these necessary expenses.
- Have plenty of assets, but not liquid. It’s possible that you have many assets, but you want to ensure it is easy for your spouse to access funds quickly in the event of your death.
- Want to leave a legacy to children. We often encounter folks who really don’t need to buy life insurance, but they feel it’s important to help their adult children or their grandchildren.
What Life Insurance Policies Are Available to a 75 Year-old?
Typically, someone in their mid 70s wants a policy that will stay in force for the rest of their life. If you’re in decent health at age 75, then the probability is high that you will past the age of 85.
Term Life Insurance
There are only three term policies available to someone aged 75. The longest guaranteed level term period is 10 years.
Frequently, someone in the 70s had a policy or two expire during the past 10 or 15 years.
A 75 year-old is eligible for three types of term policies.
- Annual Renewable Term
- 5-Year Level Term
- 10-Year Level Term
A term policy would make sense for a very specific need. For example, if you have 8 years left on your mortgage or some other debt, then a term policy would suffice. Carriers do not offer term polices beyond 10 years for people in their 70s.
Even if you only want coverage for 10 years, you should look at permanent policies that are guaranteed to age 90, 95, 100 or longer. For a 75 year-old, a policy guaranteed to age 90 would be the same duration as a 15-year term.
Permanent Life Insurance
There are several variations of Permanent life insurance policies, but 4 of the most common ones are listed here. Keep in mind, this is just a brief description.
- Whole Life: This is the most expensive type of permanent insurance. There are guarantees and cash accumulation. However, it can take 10 to 15 years to accumulate any significant amount of cash.
- Final Expense: This is a type of Whole Life insurance. Most “Final Expense” policies are offered with face amounts less than $50,000. A typical face amount is $15,000. This type of insurance is geared towards paying the cost of a funeral and related expenses.
- Universal Life: There are several types of universal life insurance, including Indexed UL, Variable UL, and traditional UL. This product costs less than whole life, but there is some risk associated with this product.
- Guaranteed Universal Life: This type of UL policy is fully guaranteed. It costs less than whole life, but it is not designed to build cash value. This can be an excellent choice for people who don’t want to mix their life insurance and investments. For more details, please click here.
PITFALL TO AVOID: Most people are wary of commercials touting life insurance for less than $1 a day. Many of these carriers offer life insurance that is quick and easy to buy. “No medical exam…5 simple questions, etc”. Sounds great, but what’s the catch?
These life insurance carriers are selling a type of whole life product that is quite expensive. Since there is no medical exam, it means their underwriting guidelines are lenient. This can make sense if you are in poor health or have a couple of more serious chronic conditions. However, if you are in average to good health, usually you can do much better with a Simplified-Issue or Fully Underwritten policy.
As a general rule, the more health questions and health underwriting requirements, the lower the premium. There are a few exceptions to this rule. Many carriers can quickly and accurately assess your health (and risk of dying prematurely) through the use of algorithms and data bases.
We have helped many people replace these Guaranteed Issue policies with Simplified Issue or Fully Underwritten policies. Every situation is different, but it’s smart to check out your options. We work with a several carriers that offer Guaranteed Issue policy. Depending on your unique needs and health, we will make a recommendation that is best for you.
You might see an offer in the mail from your Medicare Supplement carrier. It looks legitimate – and IT IS. However, you can usually do much better by shopping and/or consulting with a life insurance advisor
Guaranteed Universal Life is often referred to by names such as Term for Life or Term to Age 100. Basically, this type of policy is a lower-cost version of Whole Life without the cash-value component. No moving parts and fully guaranteed.
This is a good choice for many people in their mid-70s. Of course, one size does not fit all. So, it’s important to consider all your options. Sometimes, splitting coverage into two types of plans makes sense. For example, if the total need is $200,000, it could make sense to “ladder” the policies. Perhaps one 10-year term for $100,000 and one GUL for $100,000 would work.
So, let’s look at sample monthly rates for a 75 year-old for $100,000
|75 YEAR-OLD||PREF BEST||PREFERRED||STND PLUS||STANDARD|
Term to age 100 compared to Term to age 85
Let’s look at the rate for a 10-year term for a healthy 75 year-old male. The rate for Preferred Best is $134/month. The rate for a GUL guaranteed to 100 is $299/month. Yes, the rate is more than double, but the GUL is guaranteed to pay a death benefit. Whether you live to age 83, 93 or 103, your beneficiaries will receive a tax-free death benefit.
Of course, if you have a specific short-term need, then a 10-year term might be the better option.
Rates fluctuate, so please use our quote engine to get current rates. Also, we use three quoting services for guaranteed universal life insurance. Several leading carriers do not allow their GUL products to be quoted using any quote engine. We work with ALL the top carriers and will provide you with a customized quote at your request.
Make sure you are comparing “apples-to-apples”. Many carriers offer very strong living benefits such as chronic illness benefits at no extra cost.
TIP: Ask for Limited-Pay quotes. Most carriers will allow you to pay your premiums over the course of 10 or 15 years as opposed to age 100. This strategy can save you a lot of money.
Guaranteed Universal Life Insurance for 75 Year Olds – CONCLUSION
Hopefully, this article has helped you understand the reasons why purchasing life insurance in your mid 70s can make sense. Also, there are smart ways to approach the process of buying life insurance. Make sure you are working with an agent who represents all the best carriers and provides customized quotes.
You might not have purchased life insurance in a long time and don’t have the time or inclination to spend hours researching on the Internet. At the same time, make sure your agent asks a lot of people in your situation. Be informed by working with an experienced, knowledgeable agent.