When is it too late to buy life insurance?

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Life insurance provides essential protection. If a person has a family that relies on them for income or services, the death of that person could spell major financial disaster. Life insurance aims to prevent this from happening by paying a death benefit to surviving relatives.

In an ideal world, anyone with dependents would buy life insurance at a young age. Purchasing insurance coverage early in life can result in very affordable premiums and allow a prospective policyholder to obtain coverage from a wide selection of insurance providers. Insurers price policies based on the risk of having to pay a death benefit. Young, healthy people are less likely to die soon, so they can more easily get cheaper coverage.

However, not everyone buys life insurance early. And those who waited may be wondering if it’s too late to get protection.

Buying life insurance can become more difficult later in life, but is not necessarily impossible

For those wondering if it’s ever too late to buy life insurance, there’s both good news and bad news. In almost all situations it is possible to get some type of protection in place, even for the elderly or sick. That’s the good news.

The bad news, however, is that getting affordable standard term life insurance can indeed become impossible in certain circumstances. When this happens, there are other coverage options, but they tend to offer less protection.

Most term life insurers have age limits on who can purchase coverage. Once a person passes this age limit, they will no longer be able to purchase this common type of policy (which is the right type of life insurance for most people). Term life insurers will generally not provide coverage for people with serious pre-existing conditions. Thus, those who have fallen ill may find it impossible to purchase term life insurance.

But, even for those who are excluded from term life insurance, there are still options.

Options for people who cannot buy standard coverage

For those excluded from a standard term life insurance policy, there may still be a solution to purchase life insurance. This comes in the form of a guaranteed issue policy.

Guaranteed issue life insurance plans are what they sound like – they are life insurance policies that are guaranteed to be available to just about anyone who wants one. Guaranteed issue plans are available for seniors, and no medical exam or medical history is required. As a result, they may also be available for sicker people, including people with serious pre-existing medical conditions.

Unfortunately, guaranteed trouble coverage can be extremely expensive for limited protection. It may be difficult or impossible to get coverage above about $25,000, so the death benefit is low. Still, it can be better than nothing if it’s the only option, as it can at least help cover funeral costs and other end-of-life costs a family may incur.

Now guaranteed issue plans usually have a waiting period before full coverage kicks in. For example, it may take two or more years of premium payments before the policy pays out the full death benefit. That means it might be too late to put that protection in place once someone has a terminal illness that could lead to near-death.

For most people, however, it’s worth exploring coverage options, because it’s best not to leave loved ones unprotected if there’s an alternative.

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