Life Insurance for Seniors

Should seniors consider life insurance? Most seniors don't need life insurance for income replacement, but what about final expenses or outstanding debts?

PolicyPals team

Published February 12th, 2021

If you are a senior and want to buy life insurance, you might have thought that you were shut out of the market.

Fortunately, that’s not true. There are viable, affordable options when it comes to life insurance for seniors. 

Key Takeaways

It is a fact, however, that the average cost of coverage increases as you age. But when you decide to purchase a policy, the key things to consider are your current age, your general state of physical and mental health, and your financial goals.

Here are some important questions to ask yourself if you are a senior who is in the market for life insurance:

Should Seniors consider life insurance?

Don’t automatically assume that you need life insurance.

For instance, if you have zero debt, don’t expect to face estate taxes, have no dependents, have all your final expenses pre-paid, and don’t want to leave any type of inheritance to your survivors, then there might not be much need for a life insurance policy.

However, unless all those things apply to you, it’s likely that you should shop for some kind of life insurance based on your financial needs and goals.

When does it make sense for Seniors to buy life insurance policies?

You should seriously consider purchasing a policy if you want to provide for children or a spouse after you die, need to cover funeral costs, pay off a mortgage, or provide a fixed amount of money for any other purpose.

Of course, the younger you are, the more options you have.

As you approach 80, many of those choices will disappear as carriers are often reluctant to sell insurance at a reasonable cost to people in that age group.

What type of life insurance policies are best for Seniors?

Term coverage is often the most affordable and sensible life insurance for seniors. It offers fixed premiums and known policy lengths. It’s among the lowest-cost option if you are in better-than-average health and are willing to undergo a medical examination.

Most of your policy choices will be in the 10-year or 20-year grouping, but as you reach the milestone of your 80th birthday, it might become impossible to find a company that will sell term coverage to you.

Whole life is costly for seniors because premiums are high and there’s not enough time for cash values to build up significantly. However, it is possible to purchase a smaller whole life policy that simply covers funeral expenses. You’ll see these advertised as burial insurance.

There are guaranteed-issue and simplified life policies for seniors, but you might have to wait for two years before the coverage goes into effect because there’s no medical exam. For some of these no-exam policies, you simply fill out a short questionnaire, but don’t expect to get a death benefit higher than the $100,000 mark.

Best life insurance companies for Seniors

AIG: Best for Term Life

New York Life: Best for Whole Life

What should Seniors look for in a life insurance policy?

If you are a Senior purchasing life insurance, look closely at whether there’s a waiting period, a medical exam, a fixed or variable premium amount, and a provision for return of premiums (on term coverage) if you outlive the policy.

For Seniors, buying life insurance late in life can be tricky. That’s why it pays to read the fine print carefully and calculate your precise cash outflow compared to what you receive in terms of a death benefit.

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If you have any other questions about life insurance, be sure to reach out to your agent.