The older you are, the bigger the risk you pose to life insurance companies. For this reason, it is imperative that seniors buy life insurance sooner rather than later.
The longer you wait, the few other options you will have available to you because of your age or your health. Moreover, the longer you wait to purchase life insurance coverage, the more it will cost you because the cost of premiums is based primarily on age and health.
If you choose to wait and take out a policy 5 years from now after you have been diagnosed with something like high blood pressure, your cost can double or triple compared to what it could have been. If you wait too long companies will no longer offer options because the application cut off for many policies hovers around the age of 80 or 85.
It is important to note that starting from age 75, only 10 and 15 year terms are available. Additionally, at age 80, only 10 year term policies or guaranteed issue life insurance policies are available, which usually offer low coverage amounts for high premiums due to increased risk.
Why Life Insurance is Important for Seniors
Even as a senior there are reasons to purchase life insurance. Though you may no longer have children who are financially dependent on you, and you likely have a majority of your large debts paid off, you may still want to purchase life insurance coverage for a few reasons.
Pay off existing debts and final expenses
You can leave behind money to your family to help them pay for debt or a remaining mortgage. Also, this money can be used to pay for things such as funeral expenses, which in America average well over $7,500, and can easily reach an upwards of $10,000.
While it may be a morbid thought, there is comfort in knowing that your family will not have to face the financial burden of your death during the grieving process.
Leave your legacy behind
You can use the coverage to leave money to your favorite charity, something which incidentally helps you offset estate taxes. You might even leave money to your grandchildren for college.
Typically, this is done in the form of permanent life insurance coverage, or through term life insurance riders that allow for additional life insurance coverage to be purchased for your grandchildren or children.
Provide for Your Spouse in the Event of Your Death
Perhaps either you or your spouse is the primary breadwinner. While retirement may be right around the corner or already here and you may receive pension or 401k benefits, life insurance is a great way to make sure that your spouse is protected financially in the event of your unexpected death.
Joint life insurance policies are a great way to provide for either spouse in the event that one of you passes away early, while traditional life insurance policies can provide for one spouse who is named the beneficiary to receive the death benefit of the policy in the event of their spouses debt. Depending on your health, joint life insurance policies may be cheaper, or the same price as two individual policies.
Long Term Care or Disability Income
If you need long term care and haven’t factored the cost of this into your savings/retirement, or if you are diagnosed with a terminal illness, riders with your whole policy can help you get money when you need it, like accelerated death benefits or long term care benefits.
Preparing for long term care or disability needs can be very important for seniors as you approach retirement. The costs of housing someone in an assisted living facility can be well over $5,000-$10,000 per month, and conditions often arise faster than can be planned for in these situations. Most families do not have the finances to cover this cost, and it can result in a lot of turmoil for a family who just wants the best care for their aging relatives.
Types of Life Insurance Policies Available to Seniors
Their are two main types of life insurance policies, term and permanent.
Term life insurance is coverage that lasts for a specific period of time, usually between 10 and 30 years.
Permanent life insurance coverage lasts for your entire life, or until the maximum policy age, which is typically 95, 101, or 121.
The main difference between the two outside of the time period that they insure you for is the cost. Permanent life insurance is far more expensive in terms of cost per thousand dollars of coverage.
Another main difference is that permanent life insurance policies accumulate cash value from the premiums you pay in. This cash value accumulates in a multitude of different ways, depending on the type of permanent life insurance you have.
The last major difference between term life insurance and permanent life insurance coverage is the type of policy riders offered. Typically, permanent life insurance has far more policy riders that are offered to policy holders, but that is not to say that term policies don’t have some pretty handy ones as well.
Which Type of Life Insurance Policy is Best?
The answer to this question ultimately depends on a few factors:
- Your reasons for buying life insurance
- Your health
- Your age
- What you can afford
- Coverage needs
Term Life Insurance
Term life insurance is usually the best type of life insurance for most seniors. Obviously, if you have needs for coverage throughout the rest of your life, this is not the best type of policy for you.
But for those looking for coverage that lasts a certain period of time, this is by far the most bang for your buck in terms of coverage offered.
Depending on your age, you may have more or less policy options available to you. Typically, almost all life insurance companies provide term life coverage through age 75. However, there are a few companies life Mutual of Omaha which provide affordable term life insurance for seniors ages 65 and older through the age of 95.
Permanent Life Insurance
Permanent life insurance is expensive. And the price only increases as you get older. For most seniors, this is probably not the best type of life insurance just because of the cost alone.
However, for those who can afford a traditional permanent life insurance policy, this is a great investment because of the types of policy riders it provides, as well as the ability it gives you to leave a legacy.
Most seniors invest in permanent life insurance policies do so in order to create an estate or trust through which they can distribute their wealth to their families in the event of their death. For seniors looking to leave a legacy, permanent life insurance may be the best type of coverage. Also, permanent life insurance is recommended to seniors who expect the need for long term care coverage in the future.
Burial Insurance (Final Expense Insurance)
This is essentially no medical exam life insurance. This type of life insurance coverage is permanent and lasts your entire life. However, coverage amounts are usually limited to $25,000, with a few companies like United Home Life offering burial insurance coverage up to $100,000.
No exam life insurance is designed for people who are in poor health, people who need coverage fast, and people who do not qualify for traditional life insurance coverage.
There are not usually any policy riders offered with this type of life insurance. No exam life insurance is best for seniors who are in poor health, seniors who are too old for traditional life insurance coverage, and seniors who only have a small need for coverage. Coverage can usually be found for very cheap rates, and usually provided within 24 hours or less. For most companies, the maximum insurable age for no exam policies is 85. So if you are older than 85 and looking for life insurance, your options may be fairly thin
The Best Life Insurance Riders for Seniors
When purchasing life insurance, you not only want to focus on the coverage you are getting and the rates but also the additional benefits that come with your policy.
These additional benefits are called policy riders. Each company has their own variety of riders that are offered for specific policies. However, most companies have similar riders. The following riders are recommended for seniors looking for life insurance coverage.
Long Term Care Rider
As a senior, the one rider you should get with your policy is the long term care rider. In the event that you have to receive long-term care at your house or you have to live in a nursing home this benefit will give you monthly payments that you can apply toward that cost.
Roughly 70% of seniors will require long term care at some point so this is a wonderful way to protect yourself and your family financially in the event it happens to you.
This rider is almost exclusively offered on permanent life insurance policies.
Child Term Rider
The child term rider allows you to purchase a term life insurance policy for your children or grandchildren. This policy will be paid for by you in advance, and can later be switched over to them once they have reached adult age (as determined by the policy).
From here, they can choose to extend the term of the policy, cancel the policy if they wish to, or convert it into permanent life coverage. This allows them to get very low life insurance rates to start, and build cash value from a very young age.
Accident Death Rider
This life insurance rider allows your beneficiary to receive an increased life insurance death benefit (usually a multiple of the initial death benefit) in the event that you die as a result of an accident (as determined by the terms of the policy). This rider is fairly cheap and often a solid investment for seniors.
Accelerated Death Benefit Rider
This rider allows you to receive a portion of your death benefit in advance if you are diagnosed with a terminal or critical illness. This rider is also fairly inexpensive, and can be very helpful in the event of an unforeseen diagnosis which leaves your family left to deal with medical bills for treatment.
The downside is that you do not receive the full amount of your death benefit if you use this rider.
How Much Does Life Insurance for Seniors Cost?
Again, the costs of life insurance are largely dependent on your health and age. Here is a preview of some term life insurance rates for seniors who are in great health.
Term Life Insurance
|Age||Term||$100,000 Male||$100,000 Female||$500,000 Male||$500,000 Female||$1,000,000 Male||$1,000,000 Female|
|65||10 Year Term||$57||$37||$220||$136||$409||$254|
|65||20 Year Term||$108||$72||$457||$298||$865||$556|
|70||10 Year Term||$96||$63||$373||$241||$705||$445|
|70||20 Year Term||$207||$172||$848||$682||$1,694||$1,363|
|75||10 Year Term||$161||$112||$675||$460||$1,259||$885|
|75||20 Year Term||$280||$215||$1,254||$871||$2,487||$1,659|
|80||10 Year Term||$388||$296||$1,514||$1,221||$2,920||$2,240|
|80||20 Year Term||N/A||N/A||N/A||N/A||N/A||N/A|
|Age||$5,000 Male||$5,000 Female||$10,000 Male||$10,000 Female||$25,000 Male||$25,000 Female||$40,000 Male||$40,000 Female|
As we discussed briefly earlier, traditional permanent life insurance options are complex for seniors.
Typically they are either not offered, or offered at very expensive prices. However, this does not mean you cannot find them. We recommend speaking with an agent to find the best permanent life insurance policies for seniors.
The Best Life Insurance Companies
|Company||Why Choose Them|
|New York Life||New York Life is great for its flexibility and applications are accepted up to age 85. You can receive guaranteed premiums with your policy so you know that the cost won’t increase and they have benefits that you can add if you need to take out money for long-term care or for chronic illness. They are partners with the AARP so they give senior-based deals.|
|Mutual of Omaha||Mutual of Omaha has lenient medical exams. They provide great policies for people up to age 85 and their customer service is top-notch. They are perfect for seniors. If you decide on a guaranteed universal life insurance policy they have some of the highest coverage.|
|American National||American National has comprehensive living benefits. This company has lower death benefits that are less expensive which makes them perfect for people who are on a budget. There are many great features you can add to your policy like the terminal illness benefit had no extra cost which is great because many companies will charge you for this. They also limit the age for applications at 80 years old so you have plenty of time to apply.|
|Banner Life||Banner Life insurance company offers lenient policies that allow you to pay upfront, add many benefits, and choose between term or whole policies.|
How to Find the Best Life Insurance
When it comes to finding the best life insurance as a senior, you want to be careful to examine all of your options. Because the number of life insurance options available become fewer and fewer as you age, this makes finding affordable coverage that is best for you and your loved ones even more important.
We highly recommend working with an independent life insurance agent who works with multiple life insurance companies in order to find clients the best coverage possible. Our agents do just that!
Give us a call today to get started working with an agent to find and compare the best policies, rates and rider for your situation. Or, get started comparing rates online