What Happens To Life Insurance After Age 80?

Just celebrated your 80th birthday? That’s a huge milestone. So many things are going to change now including your life insurance policies.

People usually find it hard to buy a new policy at this age. But what about the policies you are already in? What happens to life insurance after age 80?

If it’s a permanent life insurance policy, age doesn’t matter. It’s a lifelong thing. Whereas, term insurance policies need to be converted to renewed before you turn 80.

You can utilize the policies best if you have proper knowledge of how they actually work. Stick with us to find more viable options for your needs after you turn 80.

Will Your Life Insurance Expire At Age 80?

Your life insurance expires when the “term” ends stated in your contract. Let’s see what happens to different types of life insurance policies after you turn 80.

Term Insurance Policy

Term life insurance is a common requirement when you try to get a loan. That way, the lenders can be assured that they will get the money back even if you die within a certain time period.

In this policy, you ask for coverage only for a specific term. It can range from 1 year to 30 years. If anything happens to you within this term, stated beneficiaries will receive the entire face value.

The only downside is that you can’t plan for using the accumulated premium after the policy expires. Even if you have successfully paid every installment, there’s no guarantee of a payout.

So, it doesn’t matter whether you are 80 or 90. As long as you are still within the coverage term, you don’t have to pay an extra fee for being old or submitting any medical report.

However, term insurance policies are hard to buy once you hit 70. So, enjoying the benefits of a term insurance policy as an 80-year-old is only possible if your current policy is intact yet.

Also, you can either renew it for 5 more years or convert it into a whole life insurance policy. We will discuss both options in full detail in a bit.

Permanent Insurance Policy

A permanent or whole life insurance policy is a great way to reduce financial stress for seniors. It provides the most benefit among any other type of life insurance.

Here, the premium rate is significantly higher and doesn’t come with any “term.” It stays active as long as you are alive. There’s no need to renew or submit medical check-ups at all.

Whenever you die (at 50 or 100 years old), your beneficiaries receive the full face value. Unlike the term insurance policy, it doesn’t expire after a certain point in time. It’s a lifelong thing.

Can You Renew Term Insurance Policy At Age 80?

You can renew your term insurance policy at age 80 if the particular company lets you. It varies among insurance companies and their rules. In case you find one that allows such renewals, it won’t be that easy.

There will be a tough medical check-up to assess your life expectancy. After considering both your age and life expectancy, a new premium will be fixed for you.

According to the renewal rules, the older you get, the more premium you are supposed to pay.. That’s why it’s wiser to sign up for a long-term.

Here’s how you can customize your renewal plan for a term insurance policy after 80.

Decreasing Value

There’s a renewal process that decreases the face value you started with. That means if the initial face value was $500,000, after the renewal it might decrease up to $450,000.

It happens due to the fact that the insurance company has the bear more risk of actually giving you the money as you get older. So, a lower face value is the compensation for your age.

Increasing Premium

Do you want the same face value as before? You might have certain liabilities to pay. In that case, there should be no compromise with the face value.

However, to compensate for your age, you have to pay a higher rate of premium every month. With each renewal, the rate only increases.

You might be wondering how the company allows a fixed premium when you buy 30 years of coverage? Doesn’t age affect the rate? Well, it does.

That’s why you technically pay more than an average premium rate in the early years and less in the later years. Overall, the premium looks fixed from the outside.

Year-To-Year Renewal

If you don’t have any dependents to worry about, and only care about the financial liabilities, year-to-year renewal is possible. Why maintain a policy if you know it won’t be needed next year?

In such a renewal contract, you have to sit for a medical examination every year and pay a different premium. There’s no guarantee of renewal also. If the company thinks your health is deteriorating, they can reject your renewal request the next year.

We think it’s the riskiest way of renewing term insurance especially if you are  80 years old. Usually, term insurance companies stop renewing contracts after 70 or 80.

Can You Convert Term Into Permanent Insurance Policy At Age 80?

Of course, it is possible to convert a term insurance policy into a permanent one. Once you run the policy for a while, you can choose to turn it into whole life insurance. For example, you bought a term insurance policy for 30 years.

Since there’s a low chance of being approved for renewal after you reach 80, it would be smart to convert the existing policy into whole life insurance. But make sure you abide by the expiry date of such offers.

Normally, every term insurance policy provides a certain date before which you have to submit an application for converting the existing policy. If the date passes by, there’s nothing to do.

One great feature of such conversion is that your old medical reports are enough. You don’t have to go through that again.

So, if you have recently developed a medical condition, there’s nothing to worry about. However, the premium will be higher after the conversion.

As you can see, it costs more when you convert it into a permanent life insurance policy. That’s due to the added guarantee of payment to this contract.

Is Term Insurance Better For Seniors Over 80 Than Whole Life Insurance?

A whole life insurance policy provides you with the support of a cash value while you are alive. You can use this fund (it’s actually your accumulated premium) to tackle the big expenses of your life.

That’s an attractive feature in a policy if you have dependents at home like school-going kids or a spouse. You can get such insurance policies even after you reach 80. There will be a health check-up first.

It will determine how much premium you have to pay every month.  The rate is definitely higher for this one. But the ultimate financial security is too lucrative to avoid.

On the other hand, we have a regular term insurance policy. If you are over 80, you have to keep renewing the contract. But most companies will decline your offer because of the age issue.

Plus, every renewal requires new health assessments. If you need to insure your life, a whole life insurance policy seems to serve the best rewards.

What Is The Most Feasible Insurance Policy To Get At Age 80?

If you don’t have a running policy and want to sign up for one at age 80, you should definitely consider a final expense insurance policy.

It’s designed with very low premiums per month. The face value is not huge either (in most cases). But it’s useful if your only wish is to get a proper funeral without causing financial trouble for your family.

However, choosing a specific type of life insurance policy requires a lot of research as well. Make sure the senior life insurance finder you have hired understands your needs (be it an agent or someone else.

If you have dependents who need huge funds to carry out their dream (like going to college), you can’t only think about a funeral, right?

In such cases, getting a whole life insurance policy with abundant cash value is the right choice.

On the other hand, Do you want the protection of life insurance considering you have dependents to look after, but the cost of permanent insurance seems too much? Then, stick with term insurance for 10, 20, or 30 years.

FAQs

Life insurance policies over 80 are a very sensitive issue. People realize they need financial backing only to find most doors closed. If you have more queries, feel free to check this FAQ section for clarification.

What Happens If You Outlive Your Policy?

If you outlive your term insurance policy, the policy simply expires. The company will send you a notice and that’s all. If you want to continue, apply for a renewal.

Do You Receive A Payout After Your Policy Expires?

If it’s regular-term insurance, there won’t be any payout. It only pays the face value if you happen to die within the covered period. Otherwise, there’s no cash fund.

Why Is It Costly For Seniors To Get Life Insurance?

It becomes costly as life expectancy reduces. That’s why, even though a 25-year-old can only pay $50 per month for $50,000 (hypothetically), an old person has to pay at least $300.

Conclusion

Senior citizens need life insurance more than young people. They have to pay for the medical bills, and funeral costs, leave a fund for the family, and so on.

You see, every type of need has a customized insurance policy. All you have to do is research and find the one that looks affordable for you. Not everyone has a family to cater to. So, why waste such a big amount every month on permanent life insurance?

Remember, there’s no right or wrong when the aim is to find a suitable insurance policy. It entirely depends on your specific situation. So, be careful about where you take advice from.