I’m 70 and Want Life Insurance to Help Pay for My Funeral. How Should I Start?

A CPA breaks down the life insurance choices retirees may have.

Life insurance can help support loved ones after we die. Many people purchase it earlier in life, especially when they have children at home. Still, some kinds of coverage can also be useful later in life.

That is the issue raised by a recent question from a Money Talks Newsletter subscriber.

Candy M. asks Money Talks News:

“I am 70 and need to buy life insurance. My sons are adults and I have no grandchildren, so I just need money for burial expenses. I thought that about $30K or so would pay for it. What is the best place to get it? … I do have some money in a 401(k), about $40,000 that I hope to leave to my sons. But when I am gone, they will not be able to access it immediately, so that’s why I wanted to have the life insurance.”

Life insurance choices for retirees

Money Talks News founder Stacy Johnson is a certified public accountant who holds several financial licenses, including one in life insurance. He is also Candy’s age.

According to him, life insurance can be “hard to come by” for many people in this age group. Aside from one possible exception discussed below, Candy will likely be choosing between just two types of policies:

• Simplified issue. People in good health may qualify for this kind of policy by answering a few questions. No physical exam is required.
• Guaranteed issue. People with serious health conditions, or those who are very old, are guaranteed acceptance without a medical exam or health questions. Stacy says this is the kind of policy commonly advertised on late-night television.

At first glance, guaranteed issue may seem like the better choice. But Stacy says the premiums are usually much higher than those for a simplified-issue policy.

There is another drawback as well: with a guaranteed-issue policy, you often must wait two to three years before the full death benefit becomes available. If the policyholder dies during the first few years, the insurer may only return the premiums paid, and possibly add some interest.

To find companies offering these policies, Stacy suggests searching online for life insurance and including either “simplified issue” or “guaranteed issue” in the search terms.

He notes that many major U.S. insurers offer these products, including Colonial Penn, which is widely known for its television ads.

That said, he is not recommending any particular company.

“Shop around,” Stacy says in his video response to Candy. “Make sure you get the best deal you can possibly get.”

Before comparing simplified-issue or guaranteed-issue coverage, though, he adds one important point:

“If you can qualify for regular insurance — if you’re healthy or maybe if you’re younger — that’s always going to be much cheaper. Term insurance is always going to be much cheaper.”

For Stacy’s thoughts on term life insurance and another option, whole life insurance, see “Which Is Better: Term or Whole Life Insurance?.”