Can You Get Universal Life Insurance on Someone Who Is 70 Years Old?
Universal life insurance offers flexible premium payments and death benefits. Universal life, also called "UL", may be purchased on a person who is 70 years old. The process is the same as if you were buying life insurance for someone younger, but you should be familiar with the nature of buying insurance on a person this advanced in age.
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Function
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Buying universal life insurance on a 70-year-old is usually to secure a death benefit in old age. While other purposes are possible, funeral costs are a permanent life insurance that everyone needs. Other reasons to buy life insurance at this age would be to insure any remaining debts that are outstanding, including a reverse mortgage, a traditional mortgage or outstanding medical bills.
Process
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The process for insuring a 70-year-old person is similar to, or sometimes the same as, insuring a younger person. The main difference is that the insurance company may require a more extensive health exam for a 70-year-old. For example, the insurance company may require an EKG test and more blood work, and may request more information on the insured through an attending physician's statement, also called an APS.
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Benefits
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The benefit of purchasing universal life insurance when you are 70 is that the policy may be used for your funeral expenses. If you choose a universal life insurance policy designed to remain in force for the rest of your life, called a guaranteed UL policy, the death benefit will not lapse as long as the target premium listed in the policy contract is paid. The target premium is the minimum payment required to keep the policy in force.
Another benefit of buying universal life insurance at age 70 is that you qualify for simplified issue single premium life insurance. Simplified issue universal life insurance does not require extensive medical underwriting or health exams. Some insurers offer these policies to simplify the process of purchasing a universal life insurance policy. The single premium allows you to make a large, one-time, payment to pay the policy in full. No further premiums are required.
The single premium universal life insurance policy also is as an alternative to an annuity contract. You can purchase the insurance policy with money you have not used during your lifetime. The policy pays a tax-free death benefit to your beneficiaries. Since annuities do not offer a tax-free death benefit, this can be a more efficient way to transfer your savings to your heirs.
Disadvantages
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The disadvantage of buying life insurance at age 70 is the inherently high premiums. Life insurance is based largely on age and health. Because of this, a 70-year-old will pay premiums that may end up being cost-prohibitive for the rest of his life. With universal life, the death benefit will not increase if "option A", also called the level death benefit option, is selected. This means that if the person lives long enough, she will pay more in premiums than what the death benefit will pay out at death.
Considerations
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Buying life insurance at age 70 takes careful consideration. The insurance policy should be structured so that premiums do not exceed total benefits. For example, the insured may elect "option B", also called the increasing death benefit option, on a universal life insurance policy. Option B allows the death benefit to increase over time. With increasing death benefits, the insured should not expect the premiums paid to exceed the total death benefits.
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