Buying life insurance is best when you're young, as rates are low. However, you might find that you need life insurance in your old age. At 83, you are nearing the end of your life, and your ability to obtain insurance is limited. However, you can still obtain a policy at this age.
There are only two types of policies an insurer will offer you at this age -- an annual renewable policy or a permanent life insurance policy. Life insurance companies generally do not insure individuals beyond age 85, if the state allows term insurance to be purchased at this age. This means you may carry insurance through your 85th year of life, but cannot renew it beyond this age. A permanent policy, however, may be purchased prior to this age and held until your death.
An annual renewable term policy renews every year, so the premium will increase when you renew the policy at age 84, and again if you keep your policy for the 85th year. You won't be able to renew beyond this age. The death benefit will remain the same during the renewal process. A permanent policy may have a level death benefit that does not increase with age, providing equal premium payments. In some cases, you may be offered a policy that pays dividends. These policies feature an increasing death benefit. This is because the dividends may be used to purchase additional paid up insurance. Paid up insurance is an additional insurance death benefit that is added to the policy which does not require additional premium payments to keep the in force. The increasing death benefit option on universal life insurance works by building cash value in addition to the death benefit, instead of using the cash value to offset the payment of the death benefit claim.
The benefit to you is that, even at 83, you're able to purchase life insurance. This policy can be used for any purpose by your beneficiaries. If you're looking for a burial policy, these may be purchased in small death benefit amounts. If you need enough insurance to pay off any existing debts, then you'll have to add up those debts and purchase the appropriate amount of insurance.
The disadvantage to purchasing life insurance at your age is that it is expensive. Premiums for both term and permanent policies may be unaffordable. Additionally, if you have any health conditions, then your premiums could be even higher than what the illustration shows you on a quote, since the insurer will add a risk premium to the base premium amount you pay for your policy.
- "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
- "Life Insurance"; Kenneth Black, Jr., Harold D. Skipper, Jr.; 1994
- "Life & Health Insurance, License Exam Manual, 6th Edition"; Dearborn Financial; 2004