Once you become a senior citizen, term life insurance is not affordable.
Have you ever heard that? Sure you have.
Or how about this…You don’t need life insurance after you retire. That’s another rule of thumb, isn’t it?
After you retire, there are still multiple reasons you may need life insurance. Age limits your options, but only slightly. There are plenty of products that can fill any financial gaps you might have.
Find The Best Insurance For Your Age:
6 Reasons Seniors May Need Life Insurance
1. Burial Costs
Funeral costs have risen faster than any other segment of our economy in the last 10 years. They’ve risen faster than medical and education, which is hard to believe. The average cost for end of life expenses is around $10,000. Once you throw in medical expenses, it is closer to $20,000.
A large percentage of American families, even those over 60, don’t have $10,000 in savings. Life insurance can fill that gap, and there are multiple products available for seniors at that coverage level.
2. Outstanding Debts
Debt is a problem for many of us most of our lives. You would expect to hit 65 and be debt free, but it’s not true for many Americans. In 2013, 30% of all homeowners over 65 still had a mortgage. This debt must be paid by a surviving spouse or heirs after your passing.
Life Insurance can erase that debt, so your spouse is not scrambling to find ways to repay. Neither is your loved one looking for a new place to live by selling your property below cost to get out from under mortgage payments.
What has been common is that people have paid off their homes, but then use a reverse mortgage to pay medical bills. A reverse mortgage is merely an equity loan against the value of your house. The money is not free and must be repaid at some point.
3. Estate Taxes
There are two problems many seniors have in regards to money. They no nest egg or a large nest. Both come with their own issues life insurance can solve. Rarely, do you realize that life can solve problems with too much money?
Too much money has one big problem — taxes.
When you die, your estate will be settled, and depending on the size of your assets, will write a check to Uncle Sam or your state. Unfortunately, this often means liquidating portions of your estate to pay the tax bill.
You may have planned on your estate going to your heirs and leaving a legacy. After taxes, there may not be much left. Life insurance can provide a fund that will offset taxes to your estate.
4. Pension Issues
You may have no debt. You may be retired. But you and your spouse’s monthly needs are met by a pension you receive. Upon your death, the pension reduces to the point it will not meet all the needs for your spouse.
If this is the case, term life can make up the difference in pension loss for your spouse.
5. Family Legacy
This is a concern for many people. Often life insurance is designed so your debt will not be distributed to your heirs. Most want to do more for their heirs than this. They want to leave a legacy and pass on some sort of generational wealth.
If your estate is small, but you want more for your heirs, life insurance can help you change the financial life of your family. Even if you are thinking of grandchildren or great-grandchildren, you can set up trust in their names.
A trust will protect the money until they reach an age you pre-determine. Creating a life insurance trust is more common as grandparents are raising grandchildren, and feel the need to provide for them after they die.
6. Charitable Memory
Most institutions with buildings named for people did not receive that money during the individual’s life. It was gifted to the institution after the passing of an individual. At some point in that person’s life, they purchased a life policy to be paid to a charity or organization that impacted their own life for the better. After their passing, they wanted to honor that gift with a gift of their own.
Using life insurance in this manner, allows you to give in larger amounts than you may have done in your lifetime. You are not just passing along wealth, but benefiting organizations that can multiply good you experienced.
Why Does Term Life Insurance Make Sense for Seniors?
An easy cost effective solution to many of the life insurance reason is term life insurance.
You are probably like most people and assume term life insurance is for the young. Not so.
While it may be cheaper for young people, it is still affordable compared to more permanent types of insurance. The difference between buying after 60 is that the term is shorter than you can purchase when younger.
You won’t be able to purchase a 30 year time at 65, but you can find many companies that will offer 20 year terms.
As people are living longer, life insurance companies are becoming much more flexible how long they will offer life and extend terms. There are even companies that will write a term policy up to age 90.
One of the biggest benefits of a term policy is the ability to convert it. You are able to buy term at much more affordable rates than a permanent policy.
As the policy reaches the end of the term, you may feel the need to continue insurance. At that point, you are able to convert it into a permanent life policy without the need for another medical exam.
Best Term Life Insurance Companies for Seniors
We analyzed the best term life companies for seniors. While pricing and availability were important, we also examined the financial stability of the companies as well as customer service ratings.
There is nothing worse than investing into an affordable policy only to find the company is unable to pay the claim. Or they are difficult to interact with and slow to resolve claims issues.
Here are the top 4 Term Life Insurance For Seniors 65-70:
|Company||A.M. Best Rating||Customer Reviews|
|Prudential||A+||4.2 / 5|
|Banner Life||A+||4.23/ 5|
|AIG||A+||4.1 / 5|
|Mutual of Omaha||A+||4.0 / 5|
Prudential: AM Best Rating: A+
Prudential has been around since 1875 and was founded in Newark, N.J. If you are old enough, you probably remember the Prudential slogan: “Get a piece of the rock”. Prudential specializes in products for seniors as well as hard to place life insurance
Banner Life: AM Best Ranking: A+
Banner Life consistently ranks at the top of most insurance company lists. Banner is owned by London based Legal & General Insurance and was founded in 1836. Often they will advertised under the Legal & General name.
AIG: AM Best Rating: A+
AIG is well-known name in the financial industry. They were actually founded in Shanghai China in 1919 and moved to New York City in 1939. They specialize in a wide variety of term life options and do really well with hard to place customers. If you see any products using American General, they are AIG products.
Mutual of Omaha: AM Best Rating: A+
For years, Mutual of Omaha has been associated with the TV show Wild Kingdom. They have been in business since 1909. Mutual of Omaha has very competitive term products for seniors.
Term Life Insurance Rates for Seniors Age 65-70
These two rate charts will give you a picture of how affordable term can be even past 65.
The first chart is for a 20 year term policy:
This is a 15 year term policy:
Term Life vs. Burial Insurance for Seniors
The product most often marketed to seniors is burial insurance.
It’s true that this is one of the biggest reasons for seniors to investigate life insurance,
Burial policies do have advantages. They are permanent policies, meaning they cover your entire lifespan without expiration. They also build a level of cash value.
The disadvantage is that they are low coverage policy at expensive rates. The average coverage amount is $10,000 and the max you can get is usually $25,000. They are really designed for seniors in very poor health. Medical exams are often waived for these policies, so they tend to attract those with pre-existing or severe medical issues.
If you can qualify for term life insurance coverage, your investment budget will thank you. You can always convert the term policy into something permanent in the future.
Here’s a good example of burial insurance rates:
Compare this to the $100,000 20 year term policy above. The cost is double the monthly rate but you are getting 10x the coverage. That is a much better value.
Tips for Getting Cheap Term Life Insurance for Seniors
1. Analyze your coverage needs
Do you really need a $100,000 in life? What are you buying it for? If you are buying just for final expenses and funeral needs, you can easily manage with $10,000 – $25,000. Are you trying to supplement a pension that will be lost when you die? Calculate out the missing amount over time, and use that number.
Because life insurance increases in price as we age, this is one time in life you do not want to overreach in coverage. People in their 20’s, 30’s and even 40’s would do well to buy as much life as you can afford because the rates are significantly lower.
That changes as we age, and being precise about how much you need is more critical to your budget. This is where an agent can be a huge support. Most agents have financial calculators designed to help determine the exact amount you need.
2. Think through how long you need it
No one likes to think about life expectancy, but if you are planning for your loved ones, it is an uncomfortable task. The older we are the less time insurance companies are willing to extend coverage.
3. Don’t shop with one or two companies
There are multiple companies that advertise almost exclusively to seniors. Their ads are usually during daytime TV. Often they will use a celebrity spokesperson. The most frequent companies advertising toward seniors are Colonial Penn and Globe Life. Both sound like great deals for the customers. There’s little coverage for the amount you pay.
Using a broker is your best bet. No matter how many comparisons or rate samples you study, you can’t know all the underwriting rules and guidelines. Even though the rates may look good, you may end up wasting a lot of time to discover you don’t qualify.
Get quotes online by yourself, but use an expert with many companies to help you narrow down your choices.
Use our quick quote to get a range of what we have to offer. Then speak with one of our agents as they design a life product to fit your needs and budget.