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Buying Life Insurance For A Loved One In A Nursing Home

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The best time to buy a life insurance policy is when you’re young and healthy. When you’re young and healthy, you can purchase a policy with a large enough benefit amount to ensure your family is financially protected should you pass away. In addition, you’ll qualify for low rates because of your excellent health and being less of a risk to the insurance company on having to pay on a potential claim.

However, life insurance is not only reserved for the young and healthy. There are policies made with seniors in mind. They can be an excellent choice for retirees and people in their 60s and beyond shopping for a policy, especially those who need something small enough to cover smaller final expenses such as funeral costs.

Some of these policies don’t require you to be in the best health or even live independently. Plus, if you’re the child of a parent living in an assisted living home or nursing facility, you are often eligible to purchase a policy to help ensure that their funeral and other end-of-life costs are covered.

While buying life insurance at that stage can be more difficult, it’s not impossible. So, you have options if you’re looking for coverage for a parent or another loved one who is currently or soon to be living in a nursing home.

Read about a life insurance option that can help a loved one residing in a nursing home pay for end-of-life expenses. Learn how fast you can receive a policy, how much coverage you can get, the requirements needed to be approved for coverage, and the additional details to make the best choice.

Life Insurance for Someone in a Nursing Home

Nursing home residents are unlikely to qualify for traditional insurance policies such as term life insurance and permanent plans that require medical underwriting.

The strict underwriting requirements that traditional life insurance plans require will often disqualify most people residing in a nursing home or assisted living facility based on health factors alone.

Additionally, in most cases, being a nursing facility resident will automatically disqualify an applicant, regardless of age or health status.

In fact, the majority of traditional life insurance applications will ask the question as to whether or not the insured is currently residing in either a nursing home or assisted living facility. If answered yes, the application will likely state not to continue completing it as the applicant is considered ineligible for coverage.

Many assume these requirements mean that people living in nursing home facilities cannot purchase life insurance, but this isn’t always true. There is a life insurance option available.

The life insurance policy available to nursing home residents is called guaranteed issue life insurance. These life insurance plans are designed to accept almost anyone regardless of health or living status. The only primary requirement is that the coverage is available in the state where the policyholder lives, the insured is in sound mind, and the insured meets the age requirements for the coverage.

With guaranteed issue life insurance plans, the coverage will generally be capped much less than you can get with traditional plans requiring a medical exam. However, they’re often enough to provide nursing home residents and their families with financial security to handle final expenses.

Guaranteed Issue Life Insurance for Nursing Home Residents

A guaranteed issue policy has no medical exam requirements or health questions that must be answered. These plans are primarily designed to offer immediate life insurance coverage to cover end-of-life expenses such as funeral costs.

They’re a whole life insurance policy, so you don’t need to worry about term lengths or the policy expiring, provided premiums are paid when due. However, a few factors with life insurance coverage can be viewed as potential drawbacks, starting with cost.

As a rule, these policies have higher premiums and lower benefit amounts than traditional policies. For example, the maximum policy amount for a guaranteed issue policy usually is $25,000 or less, depending on the provider.

In addition, because the coverage accepts anyone within the age guidelines, they are often purchased by individuals who would be considered at high risk of paying out a potential death claim. Therefore, individuals who buy these plans can generally not qualify for a medically underwritten policy due to significant health concerns.

Applying for a guaranteed issue policy is usually a speedy process, with approval often instantly. Therefore, when you pay your first premium, a guaranteed issue policy will be active.

However, a significant drawback of a guaranteed issue policy is that the death benefit is not payable if the insured person dies within the first two years of the policy. Instead, the payout equals a full refund of all payments paid, plus interest of typically 10%, paid out to the beneficiary.

For example, let’s say a family purchases a guaranteed issue policy for their mother, who lives in a nursing facility. Their mother is 75 with multiple pre-existing health conditions. A guaranteed issue policy is the only option for her life insurance coverage so the children are not burdened with funeral costs.

The adult children purchase a $10,000 guaranteed issue life insurance policy with the children listed as the beneficiary. Every month, the children pay a $150 premium for the cost of the life insurance coverage.

For example, let’s say their mother died 14 months after the policy was issued. Since guaranteed issue life plans have a 2-year graded death benefit, the children won’t receive the $10,000 death benefit. Instead, the insurance company would return all premiums, totaling $2,100, and interest of 10% on the already paid premiums.

However, any death after owning the life insurance after the first 24 months would pay the entire $10,000 death benefit to the children beneficiaries.

Despite the name, not all guaranteed issue policies approve everyone who applies. Some companies do restrict who policies can be issued to. These restrictions can mean policies won’t be issued to people above upper age limits (generally age 85 and older) and with certain health conditions such as mental illnesses.

When choosing a guaranteed issue life insurance plan, your best bet is to double-check for any rules or restrictions listed by the insurance provider. A licensed insurance agent or broker can help you find an appropriate policy if you’re not having luck.

Buying a Life Insurance Policy for Someone who is in a Nursing Facility

Buying a policy is generally fast and easy as long as you find an insurance company that will issue policies to nursing home residents. You won’t have to worry about steps such as medical exams or even health questions. Often, decisions are instant, and coverage can go into effect immediately.

However, there are a few things to consider before starting an application:

  • You’ll need permission from the nursing facility resident: You can’t take out a policy on an adult without their consent. So, if you’re buying a policy for a parent or another family member, they’ll need to sign off on both the policy and the application. Some providers will accept a power of attorney signature if the insured cannot sign the application.
  • You’ll need to have an insurable interest in the nursing facility resident: Insurable interest is an insurance term that means you cannot hold an insurance policy on anyone who isn’t tied to financially. You’ll generally qualify as having an insurable interest if the nursing facility resident is a spouse, parent, or another family member you’ve been a caregiver for, a power of attorney for, or whose care at the nursing facility would have a financial impact on you if they were to pass.

Information required to complete an application for coverage

Most guaranteed issue life insurance plans take just a few minutes to complete and are generally no longer than one or two pages. In addition, most providers offer paper and electronic applications that can be signed off on by online signatures.

When completing an application for coverage, you will need to have the following information on the proposed insured:

  • Name
  • Address
  • Contact information
  • Coverage amount
  • Beneficiary information
  • Details of any active life insurance policies

Suppose there is an owner of the life insurance policy other than the proposed insured. In that case, much of the same personal information will be required on the application, including the relationship to the insured.

The relationship to the insured will determine if there is an insurable interest for someone other than the insured owning the life insurance policy. For example, as previously mentioned, children owning a policy on their parents should not be an issue with the insurance provider.

However, remember that your parent needs to provide consent to someone other than themselves to own a life insurance policy on their life by signing the application. In addition, both the insured and policy owner must sign the life insurance application. 

Life Insurance Companies That Offer Policies to Nursing Home Residents

Need help finding a reputable life insurance company that can offer life insurance for a loved one in a nursing home? With that type of coverage, you will need to specifically look at life insurance providers that can offer a guaranteed issue life insurance policy.

Although guaranteed issue life insurance plans are a popular option for life insurance coverage, they are not widely offered as other types of life insurance such as term insurance. Therefore, you will need to search with multiple providers to determine if they can offer a plan.

Or, we can save you a ton of time by pointing you to a review we did just a short time ago listing the best-guaranteed issue life insurance plans in 2023. While we highly recommend that you check out that article as it will provide you with a great deal of information, here’s a quick recap of the top 5 guaranteed issue life insurance providers that will cover someone in a nursing home:

  1. Gerber Life
  2. AIG
  3. Great Western
  4. Mutual of Omaha
  5. AARP

Use our instant online quote tool to compare rates from these top GI providers. 

Nursing Home Life Insurance Quotes

Life Insurance Quotes for Nursing Home Residents

Compare rates for life insurance coverage made available to nursing home residents. Apply instantly and online.

Frequently Asked Questions

Can a nursing home take your life insurance policy?

A nursing home has no legal authority to take away a life insurance policy from a policyholder.  

Can a nursing home take a life insurance payout from my beneficiary?

A life insurance company will only pay the life death benefit payout to the individual or entity last listed with the insurance company. If the nursing home were never listed as a beneficiary, they would not be paid the death benefit. They cannot legally take the payout from the beneficiary listed with the life insurance company.

In addition, Medicaid cannot take a life insurance payout from a beneficiary under federal law.

Is it required for the nursing home to be a life insurance beneficiary?

A nursing home should not be listed as a beneficiary to their resident’s life insurance policy, nor should they require themselves to be a beneficiary on a resident’s policy. Furthermore, the nursing home should have no involvement with the life insurance policy at all.

The beneficiary of a life insurance policy should be someone that your passing would cause a financial impact. That could be a spouse, children, or even grandchildren. You could also name a family trust as the beneficiary, which has a qualifiable insurable interest and is highly common when setting up beneficiaries of life insurance policies.

Why is there a 2-year wait on the death benefit?

The 2-year wait on a death benefit payout is referred to as a graded death period. It’s a standard policy feature found on all guaranteed issue whole life insurance plans and some final expense whole life insurance plans, both of which are popular coverage options for the senior community.

There is a 2-year wait on a death benefit payout in the first two policy years because of the level of risk the insurance company is taking on by approving coverage to anyone that meets the age requirements, regardless of their health status. For example, an applicant can have had a recent cancer diagnosis or been diagnosed with a terminal illness that still qualifies for a guaranteed issue life insurance policy.

However, to offset the financial risk to the insurance company of having to pay on multiple claim payouts shortly after approving coverage, they limit the death benefit payout to a refund of premiums plus interest if death occurs within the first two policy years. As soon as policy year two has ended, the full death benefit becomes payable when the insured passes away. 

How much does a nursing home life insurance policy cost?

Purchasing a life insurance policy on a loved one in a nursing home can be costly. As mentioned throughout the article, the life insurance you would be purchasing is guaranteed issue life insurance and is one of the more expensive coverage options available.

When you purchase a guaranteed issue life insurance plan, your rates will be locked in throughout the contract, typically lasting to age 121. In addition, your loved one’s coverage will also earn a cash value benefit which can be borrowed from if needed.

To give you an idea of how much it will cost to purchase a life insurance policy for someone in a nursing home, look at the rate table below, where we have pulled rates from our top providers for multiple coverage options.

Nursing Home Resident Life Insurance Quotes

Male Rates$5,000$10,000$15,000$20,000$25,000
40 Year Old$18.28 / monthly$36.55 / monthly$54.83 / monthly$73.10 / monthly$91.38 / monthly
45 Year Old$20.48 / monthly$40.95 / monthly$61.43 / monthly$81.91 / monthly$102.38 / monthly
50 Year Old$22.50 / monthly$44.09 / monthly$65.68 / monthly$87.27 / monthly$108.86 / monthly
55 Year Old$29.43 / monthly$57.93 / monthly$86.44 / monthly$114.95 / monthly$143.46 / monthly
60 Year Old$32.40 / monthly$63.89 / monthly$95.38 / monthly$126.87 / monthly$158.36 / monthly
65 Year Old$43.04 / monthly$85.16 / monthly$127.28 / monthly$169.40 / monthly$211.52 / monthly
70 Year Old$50.05 / monthly$99.03 / monthly$148.32 / monthly$197.45 / monthly$249.59 / monthly
75 Year Old$70.22 / monthly$139.52 / monthly$208.82 / monthly$278.12 / monthly$347.42 / monthly
80 Year Old$104.16 / monthly$206.32 / monthly$308.48 / monthly$415.67 / monthly$519.08 / monthly
Female Rates$5,000$10,000$15,000$20,000$25,000
40 Year Old$14.77 / monthly$29.55 / monthly$44.32 / monthly$59.09 / monthly$73.87 / monthly
45 Year Old$16.12 / monthly$32.24 / monthly$48.36 / monthly$64.48 / monthly$80.60 / monthly
50 Year Old$17.69 / monthly$34.47 / monthly$51.24 / monthly$68.02 / monthly$84.79 / monthly
55 Year Old$22.60 / monthly$44.28 / monthly$65.95 / monthly$87.63 / monthly$109.31 / monthly
60 Year Old$25.99 / monthly$51.06 / monthly$76.13 / monthly$101.20 / monthly$126.27 / monthly
65 Year Old$31.76 / monthly$62.61 / monthly$93.45 / monthly$124.30 / monthly$155.15 / monthly
70 Year Old$38.23 / monthly$75.53 / monthly$112.84 / monthly$150.15 / monthly$187.46 / monthly
75 Year Old$54.54 / monthly$108.17 / monthly$161.79 / monthly$215.42 / monthly$269.04 / monthly
80 Year Old$85.67 / monthly$167.00 / monthly$248.32 / monthly$329.64 / monthly$439.55 / monthly

*Sample rates shown in the above table are based on males and females considering a guaranteed issue life insurance policy. The rates used in the table above are current as of 3/23/2022, pulled directly from our online quote tool.

Can a nursing home resident have multiple life insurance policies?

There are no limits on the amount of life insurance policies someone in a nursing home or outside of a nursing home can have. Therefore, owning multiple life insurance plans is perfectly legal. However, an insurance company will check to ensure you’re not overinsuring yourself based on the total amount of coverage you already have in place or intend to apply for.

Part of the application process requires you to list all life insurance coverage and the benefit amounts you currently have in place and do not intend to replace with new coverage. As long as the total amount of life insurance coverage on the nursing home resident’s life is not out of what qualifies for financial justification guidelines, there should not be any issues with multiple policies.

Can I use life insurance to pay for nursing home care?

Life insurance policies are meant to provide financial protection to your family in the event of your death. However, there are a few exceptions. Several life insurance policies can now offer financial security while you’re alive through newer policy features called living benefits.

Newer life insurance features offered on many of today’s life insurance policies can include an advance payment of the death benefit if you become ill with a critical or chronic illness. Some policies even offer a long-term care rider to help pay for nursing home care.

The downside with these popular life insurance features is that they are not offered on guaranteed issue life insurance plans which are the only type of life insurance someone in a nursing home would qualify for.

However, because whole life policies build cash value, you can borrow against the cash value of a whole life insurance policy to cover potential nursing home costs, which can act as a living benefit.

What is long-term care insurance?

Long-term care insurance isn’t life insurance or health insurance. Instead, long-term care insurance is a specialized type of insurance policy designed to help you pay for a stay in a long-term care facility.

You can buy a plan for yourself or your loved ones years before entering a long-term care facility and use it to help lessen the financial burden of paying for long-term care costs.

Will a life insurance policy impact my family member's eligibility for Medicaid?

Although you can’t pay for long-term nursing home care with Medicare, some nursing facilities accept Medicaid, which can help with costs. The issue with Medicaid, life insurance, and nursing home costs is that they may not mix well together.

A life insurance policy that earns cash value, such as guaranteed issue whole life insurance, is that the cash value accumulation is counted as an asset, potentially affecting your eligibility for Medicaid. The maximum asset amount to qualify for Medicaid will vary by state. However, most states limit an applicant to no more than $2000 in total assets for eligibility for Medicaid.

There are ways for someone to receive life insurance coverage and still be eligible for Medicaid. For example, if you are the child of a parent in a nursing home that needs a life insurance policy, as long as the child is the owner of the life insurance policy and the parent is the insured, the cash value counts towards the owner of the life insurance policy and not the insured.

How much life insurance coverage does someone in a nursing facility need?

Most life insurance policies purchased for someone in a nursing home ensure that final expenses can be handled and are not placed on loved ones to worry about.

These expenses could be paying for a funeral service, medical fees, or other costs that would otherwise fall to family members. But, of course, it’s difficult to predict the exact price of end-of-life medical care.

In general, it’s a good idea to purchase a policy that is at least large enough to cover a funeral. After that, it might be best to look at how much your monthly premiums will rise as the death benefit goes up and buy what you can comfortably afford.

Keep in mind that many guaranteed issue policies have a maximum death benefit of $25,000, and the life insurance plans can be rather expensive.

If your coverage needs are greater than $25,000, you may purchase another guaranteed issue plan with another provider stacking the death benefit.

Is there an alternative to buying a life insurance policy to make sure funeral expenses are covered?

Many funeral homes offer ways to help clients pay for their funerals in advance. Plans, called prepaid or pre-need funeral plans, offer an option for people who are only looking to make sure that their funeral expenses are handled before their passing.

Pre-paying for funeral expenses allows you to work with a funeral home to select all the details of your funeral and burial well ahead of time. You’ll choose everything from a coffin to the details of your ceremony. You’ll then be able to pay for everything you’ve selected in monthly installments.

These plans can be great for people who know exactly where they’d like to be buried and have their services. However, there are some drawbacks.

One of the most significant disadvantages is that this type of planning is an installment plan and not an insurance policy. So if you die before you’ve paid your entire pre-need plan, your family will still be left with paying the balance.

Additionally, if you change your mind about the funeral home or funeral options you want, you might have difficulty making changes.

How much does a funeral cost?

It can help knowing how much an average funeral costs when determining the right policy size for a nursing home resident. According to The National Funeral Directors Association (NFDA), the average American funeral will cost $7,848 in 2021, but the exact cost will depend on your and your family’s choices.

For example, a small ceremony and cremation are significantly less expensive than a full-service funeral and burial in a metal casket. In addition, items such as flowers, obituaries, guestbooks, and ceremony programs can all add to the cost.

Final Thought

It’s always good to start shopping for a life insurance policy in your younger years. However, there are ways to buy a policy at any stage of life. That includes residing in a nursing care facility.

Many policy types will no longer be available, but you’ll still have an option with a no medical exam required guaranteed issue policy. An NMEQ life insurance agent or broker can help if you’re having trouble finding the best policy for your situation and budget.

At No Medical Exam Quotes, we can show no-obligation quotes from the top life insurance providers. You can fill out our form to see what your costs might look like.

Life Insurance Rates for Nursing Home Residents

Compare quotes for life insurance coverage made available to nursing home residents. Apply instantly and online.

Picture of Jeffrey Manola - Life Insurance Expert
Jeffrey Manola - Life Insurance Expert

Jeffrey Manola is the founder of No Medical Exam Quotes, an online insurance agency that strongly focuses on helping people shop for the perfect life insurance policy. He is a licensed life insurance expert and content creator for the website.

Before becoming a life insurance agent, he served in the United States Marine Corps, transitioning from serving his country to helping families find affordable life insurance coverage beginning in 2009. Since starting a career as a licensed life insurance agent, Jeffrey has helped thousands of families with their life insurance needs.

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