Is There a Life insurance Age Limit?

As you get older and think about buying life insurance, you may be wondering: Is there a life insurance age limit?

Generally speaking, you can qualify for life insurance until age 85. Let's cover age limit for different types of products and their life insurance policy.

Why is Life Insurance Important for seniors?

Life insurance can provide a financial safety net for your spouse and other dependents in the event of your death with their life insurance coverage, including death benefit. The proceeds from your policy can be used to:

·     Support your partner or spouse

·     Help you leave behind a financial legacy

·     Ensure your loved ones will not have to shoulder your funeral and end-of-life expenses

·     Be a part of your estate plan

How Age Impacts Life Insurance

Age is the most important factor that determines an applicant’s insurability and may disqualify some Canadians from getting medically underwritten life insurance.

However, each life insurance company follows its own underwriting guidelines, so it’s possible where one life insurance company deems you ineligible another may decide to approve you. The type of life insurance policy matters, too. For instance, some companies may offer term life insurance premiums to those up to age 65 while others may be willing to cover applicants up to age 71.

Physical health also plays a key role. If you are older but in good shape, you may easily qualify for a standard policy. On the other hand, seniors with one or multiple pre-existing conditions will have their options limited to non-medical life insurance plans.

Finally, age impacts how much you pay for life insurance coverage. Life insurance premiums increase as you age. The reason it increases every year is simple math. As you grow older, there’s a higher risk of getting sick, getting disabled, or dying, and thus you are more expensive to insure.

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Types of Life Insurance for Seniors

Depending on your age and health, you may have access to all types of life insurance policies, or just a few of them.

Here are the general guidelines for people looking to buy life insurance in their golden years:

·     Seniors who are in good shape can qualify for medically underwritten life insurance policies, such as term life and whole life

·     The age limit for term life and whole insurance is usually 75 years and 85 years, respectively

·     Once you cross the age of 75, you can only buy permanent life plans and permanent life insurance

·     Seniors who have health problems may only qualify for non-medical life insurance products, such as guaranteed issue life insurance

Now that you know what insurance options are available, it's helpful to understand the situations in which each of them works the best.

Term Life Insurance

Term life insurance policy covers you for a certain period of time. This period could be 10, 20, 30, or even 35 years. Since most term life plans are renewable only up to a certain age, like age 75 or 85, you will have limited options as far as the length of policy term is concerned.

For seniors, term life insurance policies can be a good option in the following situations:

·     You still have debts, like a mortgage

·     You are nearing retirement but have not yet saved enough for it

·     You are supporting a grand-child until he or she starts earning

Whole Life Insurance

Whole life insurance is a type of life insurance product that offers benefits to both the beneficiary and the policyholder include death benefit, based on different insurance company. The beneficiary receives the death benefit upon the insured’s death, while the policy owner can access cash value, which grows on a tax deferred basis.  Unlike term life plans, whole life insurance doesn’t come with an expiry date. That means your beneficiary will receive the payout, no matter what.

Consider a whole life insurance in the following situations:

·     You want to preserve the value of your estate for your heirs

·     You want to make a charitable donation after your death

·     You do not want to burden your loved ones with your funeral and other end-of-life expenses

Guaranteed Issue Life Insurance

Term life and permanent life insurance like whole life insurance usually require medical underwriting, so getting approval with underlying health problems can be difficult. If you find these policies beyond your reach, don’t worry. You still have options. Some options include death benefit.

You can buy a guaranteed issue plan, a small whole life insurance policy that doesn’t require a medical exam. It can help you cover your end-of-life expenses and leave a small inheritance to your children or grandchildren, or so called death benefit.

Cost of Life Insurance by Age

Life insurance premiums go up by 8% to 10% with every year you age. But, according to experts, if you are over 50, be prepared for a steeper increase. Premiums could increase by up to 12% for those who are over 50. So if you think you’ll need life insurance policies in the future, it’s a good idea to buy life insurance coverage now when you still qualify for lower rates.  

Factors that affect your life insurance rates

Life insurance premiums become more expensive as you grow older, but age is not the only factor that insurers consider. They also take into account your health, smoking status, and how much protection you need and for how long, which also affects death benefit.

Conclusion

The maximum age limit forgetting insurance can vary depending on the insurance company and the type of life insurance.

While the age limit for term life plans is typically 70 or 71 years, whole life insurance is available till age 85. Apart from your age, eligibility largely depends on your health. If you have serious health problems, you might only qualify for guaranteed issue insurance, the cut-off age for which is usually 85 years.

It's essential to underscore the importance of taking action early. Navigating the insurance landscape as a senior might seem daunting at first, understanding policies like death benefit, but armed with the right information, it can be a lot less intimidating. Regardless of your age and health, you can count on Dundas Life to help you find the life insurance coverage you need. Reach out today to book a call and review your options with a licensed insurance advisor.

Frequently Asked Questions (FAQs)

At What Age Should You Get Life Insurance?

The best time to buy life insurance is when you are at an early age. Insurance companies reserve their best rates for healthy applicants who are in their 20s and 30s. Once you purchase insurance, the monthly premium rate doesn’t change for as long as the coverage lasts.

So taking out a policy before reaching mid-30s allows you to lock in a low monthly rate for the next two or three decades (in the case of term life insurance) or life (as is the case with permanent life insurance).

Can you be denied life insurance based on your age?

Yes, your insurance application can be turned down once you reach a certain age. The upper age limit for term life insurance policy is around 75 years. Also, insurers also limit the length of policy term offered to older applicants. For example, a 70-year-old applicant won’t qualify for a policy with a 30- or 25-year term, though she may still be able to buy a 10-year-term life plan.

Typically, whole life insurance has a higher age limit. You can purchase a whole life plan until age85, provided there are no high-risk factors (like a serious illness). If you have health issues, consider guaranteed issue life insurance policies instead. Unlike term and whole life plans, it doesn’t involve medical underwriting, so you can get coverage despite serious health concerns.

Guaranteed issue policies typically cap at around 75 years old.

Can I extend my term life insurance as I get older?

Term life insurance policies covers you for a certain period of time. If you outlive that term, the coverage automatically terminates. Most term life plans come with what is called the renewability clause.

It states that the policyholder can renew the policy for additional terms until a certain age without undergoing any new medical underwriting. However, keep in mind that your premium rate will increase considerably at each renewal.

Can seniors change their life insurance policy as their needs evolve?

As a senior, you might be able to make certain changes to your insurance plan as your life changes. For instance, many term life plans have a conversion privilege that allows the policyholder to switch to permanent life insurance without a physical examination before age 71. Some policies also offer the option to add riders and increase the coverage amount.

How can seniors find affordable life insurance?

There’s no denying insurance premiums go up with every passing, and past the age of 50, the increase is quite substantial. All the same, this doesn’t mean seniors cannot qualify for affordable rates. Comparing quotes from multiple insurers, maintaining good health, and picking term life over whole life insurance can go a long way in reducing your costs.

What is the maximum term length a senior can get for term life insurance?

If you are over 60 and want to buy term life insurance, your options will likely be limited to10-year, 20-year, or 25-year term lengths. Most companies won’t write you a 30-or 35-year term life policy, even if you are in good health.