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Are there Limits For Senior Life Insurance?

Recently we took my niece to a water park for her 8th birthday. She said it was the best day of her life. There were rides, slides, and pools of all shapes and sizes throughout the park.

Some of the larger slides seemed geared towards adults, such as the 60 foot slide that was basically a straight drop. One thing that stood out to me was the height restriction for these slides. The only restriction was that you had to be 42 inches tall. The average four to five-year-old would satisfy this height requirement. For slides that are so aggressive, I was shocked to see such loose restrictions.

These loose restrictions remind me of the types of senior life insurance products that we offer. The most popular form of senior life insurance that we deal with is a simplified issue whole life insurance also referred to as a burial insurance policy. It is a great option for most seniors because the eligibility guidelines are fairly lenient, making a policy easy to obtain. However, there is no guarantee that an individual can obtain a policy.

We often are asked, “Are there limits to the policy I can purchase?” The answer is based on the individual purchasing the policy. Let’s take a look at the five most common limiting factors to purchasing a senior life insurance policy.

The first limiting factor is an individual’s location at the time of purchase. This does not mean that one state will have higher prices than another state for the same company and policy. Your location simply determines what insurance companies are available in your area. Not all insurance companies operate in all 50 states. Therefore, you can be limited by your location, depending on the available companies. For instance, New York has fewer options than Texas because there are only a few companies that offer senior life insurance policies in New York.

The second limiting factor is your gender. This does not mean you will have fewer options because you’re either male or female. Gender simply contributes to the overall price of the policy. Since females have a longer life expectancy, the base price of their policy is cheaper than for a male of the same age.

The third limiting factor is an individual’s tobacco usage history. Most companies are only concerned with an individual’s usage of tobacco in the last 12 months. An individual is typically considered tobacco free if it’s been 12 months since their last use of tobacco. Most of the time this factor will not disqualify an individual from coverage. However, because tobacco usage can lead to other health complications, the policy pricing for an individual who uses tobacco is higher than an individual who does not. Tobacco usage can disqualify an individual from coverage if there is a history of lung complications.

The fourth limiting factor is an individual’s age at the time of application. Usually age will not disqualify an individual from coverage. However, age can change the price of the policy. A younger individual will be offered the same policy at a lower price than an older individual.

Some insurance companies will limit the policy size for certain age brackets, most commonly from age 75 to 85. The majority of the companies offering these types of senior life insurance policies or burial insurance policies have a cutoff age after which they will no longer offer a new policy. The industry standard is age 80 or 85. However, there are companies that will offer coverage up to age 89.

The fifth limiting factor is an individual’s health at the time of application. The simplified issue whole life insurance policy is most often used to cover an individual’s burial cost or final expenses. These policies are usually smaller in value, ranging from $3,000 to $50,000. The health criteria are often more lenient because of the smaller face amounts of these policies. Typically, insurance companies seek to limit high risk policies for individuals who have experienced major health complications within the last 24 to 36 months.

Depending on the limiting factors, some insurance companies will offer a guaranteed acceptance life insurance policy that does not require any health screening or health history checks. These policies are modified a bit from their original intent but can be a good fit for individuals with a recent history of major health complications.

Hopefully, this serves as an overview of the most common limiting factors to purchasing a senior life insurance policy. If you have any questions about this information or would like to better understand the options available to you, feel free to contact one of our senior life insurance specialists. We are licensed in most states and would be glad to assist. We look forward to working with you.