Life Insurance for Seniors

It is not commonly known that Life insurance  for seniors is availableup through the age of 87!  Many people falsely assume that life insurance would not be available to seniors since, all things being equal, there is a much higher probability of death within a given period of time.  Given that this is true, and it is, you may wonder why how it is that life insurance could be available to seniors.  It all has to do with the laws of probability.  Life insurance companies can control for many differnt variables having to do with life expectancy.  Once these variables are controlled for, a life insurance company is willing to make a "bet", so to speak.

Term life insurance and life expectancy for seniors

Here's something else to consider: life expectancy in the U.S. is about 75 for men, and for 80 years for women, but this statistic doesn't really tell all that much because it is an average for all people.  What is not clear by this general set of statistics is how long you may expect to live once you've reached a certain age.  For example, a woman who reaches the age of 70 may expect to live another 16 years!  Regard the following life expectancy chart:

But these are just averages for everyone who might have reached a particular age between 71-84.  The life expectancy for seniors within this age range who actually qualify for life insurance would necessarily be much higher.  Precise data is not easily available to the general public, but a female, aged 71 who is height/weight proportionate with no significant medical history might easily expect to live another 20 years, and this number wouldn't be significantly different for males.

To a certain extent, life expectancy can be inferred by the fact that a life insurance company will be happy to sell a 70 year-old female a 20 year term life insurance policy for up to just about any amount she wants as long as she is willing to pay the premiums.  It's not really about age so much as it is about odds.  Suppose you had ten million dollars.  Suppose further that you had a good friend who was 90 years of age who you kinew as an active and vibrant person who arose every day at 5 a.m. and walked 3 miles along the shore line.  Would you be willing to bet ten thousand dollars against your ten million that your friend would live another year?  If a year seems too long to risk such a sum, would you be willing to make the bet that your friend would live another month?  What about a week, a day, an hour or even a second?  Even though the money at stake is rather large, and the payoff relatively small, at some point it becomes almost a sure bet.

So, up to a certain point, it's not really about age since it is really a simple matter of adjusting the price of the policy to account for increased risk.

The reasons why life insurance companies issue life insurance to seniors

Life insurance companies make it their business to know the odds, and when information has been collected for many years for millions of people, they are in a position to make a fairly good bet on how much to charge etc. based on life expectancy.  But there is something else very important to consider: the price of life insurance in not based solely on life expectancy.  It is also based on the number of policies that lapse each year.  As people age the probability of death increases with each passing year.  But so too does the probability that their life insurance policy will lapse.  If a 70 year old takes out a 20 year term policy and it lapses after 10 years, then a great deal of the risk inherent in such as policy is removed from the standpoint of the life insurance company.

Your term life insurance health exam is basically the same one that everyone must submit to

Another important thing to know about seniors and life insurance is that life insurance companies do not suffer from the same kind of ageism that a great deal of the rest of the population is afflicted with.  Age in and of itself will generally not make a great deal of difference.  To illustrage the point, a 40 year old with a history of heart problems will find it more difficult to get life insurance than a 80 year old man who has no history of heart problems.  The health status of each life insurance applicant is judged according to the same set of tests. 

There are no policy limits for seniors

The same idea basically applies to the amount of life insurance available to seniors.  A life insurance company will not say, "Well, we'll issue a policy, but because you're 75 it can only be for this much."  Either you are an acceptable risk or you're not.  If you are an acceptable risk, your premiums will be higher if you are older, but there won't be any restrictions.

If you are a senior and you are determined to be in good health, then there is an excellent chance that you will be able to obtan life insurance if you so wish.