Seniors may struggle to locate the right life insurance policy, but there are great coverage options available – whether you want to fund final expenses or leave a lump sum for your family.
While it is true that life insurance plans get more expensive as you age, many insurers will accept older persons, even if they are not in great health. Here’s what you should know when looking for life insurance as a senior.
Before you start shopping, determine whether you require life insurance. If you are debt-free and have sufficient assets or monies set aside for final expenses, you may not need coverage at all.
A life insurance policy may make sense if:
- Have outstanding debts that others will have to repay after your death.
- Use your salary to support your spouse, domestic partner, child, or other dependents.
- Want to cover your own funeral and burial expenses.
- Have a large net worth and wish to pay estate taxes.
- Want to leave an inheritance to people you leave behind.
- Plan to make a charitable donation.
Types of life insurance for seniors
Term life: Cheapest option
A term life insurance policy may be a smart, low-cost alternative if you’re in good health for your age and ready to undergo a medical checkup. Because term life insurance is transitory, it is best suited for settling debts, such as a mortgage, or providing financial support for a spouse or dependent if you die during the policy’s term.
If you look for life insurance in your 60s and 70s, you can usually get a 10- or 20-year term life policy, but if you’re above 80, you’ll probably have trouble finding term life coverage.
Whole life: Cash value component
Whole life insurance usually gives lifetime coverage as long as you pay the payments. It increases in cash worth over time. You can then withdraw the cash or obtain a loan against the value. However, the cash value of life insurance can take a long time to accumulate—sometimes a decade or more.
This sort of life insurance is often more expensive than term policies, especially if purchased later in life. This is because as you age, your life expectancy decreases, which means the insurer may have to pay out the insurance earlier. Furthermore, we tend to develop health difficulties with time, which might lead rates to increase.
Guaranteed issue life insurance: No medical exam
Guaranteed issue life insurance, sometimes known as senior life insurance or “final expense” insurance, does not have any medical prerequisites for approval. Life insurance firms employ medical exams to better evaluate your health and anticipate your life expectancy, therefore policies that require them are typically less expensive. However, if your health makes you ineligible for coverage, no-medical-exam Life insurance with simplified or assured issues may be a viable choice. Because life insurance medical tests are often free, they may be worthwhile even if you are not in excellent health.
These policies often include a two-year waiting time before full benefits are accessible, which is known as a graded death benefit or limited benefit period. Unless you die from an unintentional cause, your beneficiaries may not get the entire amount of death benefits from your policy during this two-year period. Instead, the insurer will either refund them for the premiums you paid, plus interest, or pay a lower amount.
Alternatively, simplified issue life insurance requires you to fill out a health questionnaire rather than a medical exam. Coverage is typically low, with limits rarely exceeding $100,000.
Permanent life insurance: Other options
If you’re looking for permanent life insurance, you have more alternatives than just a whole life. This includes:
- Universal life insurance provides variable premiums and death payments.
- Guaranteed universal life insurance is a type of universal life insurance that offers level premiums and death benefits. It has lower premiums than whole life insurance, but the cash value buildup is small, and you may be required to take a medical exam to qualify.
- Variable life insurance provides a flexible death benefit and allows you to choose which investments to allocate your cash value into.
- Variable universal life insurance offers flexible rates and allows you to invest the cash value component of your policy.
- Survivorship life insurance normally covers two spouses and pays out when the second person dies. This policy is sometimes referred to as second-to-die joint life insurance.
Funeral insurance: Pays for your funeral only
Another alternative for seniors is funeral insurance, sometimes known as pre-need insurance. These plans are often purchased from funeral homes, and the proceeds are paid directly to the funeral home to cover the cost of scheduled services.
Funeral insurance differs from burial insurance in that the death benefit is paid to your chosen life insurance beneficiaries, who can then use the money for whatever reason they like.
Cost of life insurance for seniors
Finding cheap life insurance for seniors is not always easy, as the cost of coverage often rises with age. However, if you’re in good health, there may be more economical solutions accessible. Here is the average cost of life insurance for older persons, including those over the age of 80.
Average monthly life insurance rates for senior women
| Policy type | Age 60 | Age 70 | Age 80 |
| 10-year term life ($100,000) | $38 | $102 | $476 |
| Whole life ($100,000) | $239 | $430 | $834 |
| Guaranteed universal life ($100,000) | $173 | $307 | $649 |
| Simplified issue whole life ($10,000) | $31 | $65 | $97 |
| Guaranteed issue whole life ($10,000) | $53 | $78 | $183 |
| Source: Covr Financial Technologies. Average rates are from three top carriers, for healthy, non smoking applicants. | |||
Average monthly life insurance rates for senior men
| Policy type | Age 60 | Age 70 | Age 80 |
| 10-year term life ($100,000) | $51 | $148 | $544 |
| Whole life ($100,000) | $284 | $522 | $984 |
| Guaranteed universal life ($100,000) | $200 | $369 | $736 |
| Simplified issue whole life ($10,000) | $54 | $88 | $188 |
| Guaranteed issue whole life ($10,000) | $66 | $103 | $227 |
| Source: Covr Financial Technologies. Average rates are from three top carriers, for healthy, non smoking applicants. | |||
How to shop for senior life insurance
When choosing the type of life insurance to purchase, examine your financial objectives and how much money you’ll need to achieve them. A term life policy, for example, could cover mortgage payments or other outstanding debts that would be borne by others after your death. If you want to pay for funeral expenditures, you might consider a small whole life policy or burial insurance, as the death benefit is paid out regardless of when you die. Perhaps you want to leave a significant bequest to your loved ones with guaranteed universal life insurance.
Before purchasing a policy:
- Shop around. Compare monthly premiums and death benefits to make sure you’re obtaining the best coverage for your budget and financial objectives. When comparing quotes, make sure to include your medical history to get the most accurate estimate. Insurers’ life insurance underwriting rules vary, so it’s crucial to understand where they stand on specific health problems. As a senior, if you have heart illness, cancer, stroke, diabetes, or kidney disease, you may face higher premiums or be denied coverage under a typical policy. In that situation, you have additional options, including guaranteed issue life insurance.
- Work with a fee-only life insurance adviser to ensure that you select a policy that is appropriate for your situation, especially if you intend to purchase life insurance with a cash value component.
- Read the fine print carefully. Take notice of essential details, such as which causes of death are not covered and what happens if you are unable to pay your premiums.
Determine whether you need a rider
Life insurance riders are features that can be added to a policy, sometimes at an additional cost. Riders differ by company and policy, but include:
- Accelerated death benefit riders allow you to receive a portion of your policy’s payout if you are diagnosed with a terminal disease. Similar riders provide payouts if you are diagnosed with a catastrophic or chronic sickness, or if you require nursing home or round-the-clock care.
- Long-term care riders assist pay for in-home care or nursing homes.
- Child term riders give a payout for the policyholder’s young children in the event that they die within the policy period.
