How is 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.
The need for family protection knows no age limit. And there are also age-specific needs, such as retirement planning and estate planning. However, when you’re working with older life insurance clients, there are also some guidelines you’ll need to keep in mind.
One of the basic needs 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, and therefore seniors are not generally considered a viable life insurance candidate.
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. 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.
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 a maximum monthly income for their own lifetime only, or 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. Although previously this type of retirement planning might only have applied to those aged 65, as more and more Americans work past the traditional retirement age, older clients are becoming hot prospects.
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.
Here are some guidelines to follow as you help your clients who have reached the golden years shop for life insurance.
- Make sure your client gets 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.
- Actively support your client throughout the underwriting process. Additional underwriting requirements are often imposed and the applicant needs to feel comfortable in complying with them.
- Obtain professional tax and legal advice with regards to policy ownership and other estate issues.
There are many circumstances where your older clients may find themselves in need of a life insurance policy. With the right carrier and support, you can insure an 80-year-old.
Steven H. Kobrin is an independent life insurance broker and nationally recognized expert in field underwriting for people considered high risk. He can be reached at (866) 633-1818 or [email protected]